Oil prices continued to decline on Tuesday amid investor disappointment over the limited scope of China’s latest stimulus package and growing concerns about a market glut. According to Reuters, the Brent crude oil index fell by 17 cents (0.2%) to reach $71.66 per barrel, while futures for US West Texas Intermediate crude oil fell by 20 cents (0.3%) to $67.84 per barrel. Over the past two trading sessions, both indicators have already lost more than 5% of their value.
Last Friday, China, the world’s largest oil importer, announced a 10 trillion yuan (USD 1.4 trillion) financial support package to reduce the debt burden of local governments. However, this step did not cause the expected optimism among investors, especially in the face of new economic challenges associated with the re-election of Donald Trump as US president.
The market remains tense as it awaits monthly reports from OPEC, the International Energy Agency (IEA) and the US Energy Information Administration, which could adjust demand forecasts. Today, OPEC will release its next market review, which, according to analysts, may lower its oil demand estimates through 2025, further increasing pressure on the market and prices.
Commonwealth Bank of Australia analyst Vivek Dhar noted that OPEC+ may continue to delay the lifting of voluntary production cuts, which, however, will not relieve the market of oversupply.
The US dollar is holding at its highest levels in four months on expectations that high interest rates will continue in the US for a longer period of time. Markets are also paying attention to US inflation data and statements from the Federal Reserve, which are expected this week.
