WEB DESK: Global oil prices dropped by over $1 a barrel, losing more than 1.5 per cent in early trading on Monday. This decline followed disappointing inflation data from China and uncertainty over Beijing’s economic stimulus plans, raising concerns about weakened demand.
By 0020 GMT, Brent crude futures had fallen by $1.26, or 1.59 per cent, to $77.78 per barrel, while US West Texas Intermediate crude dropped by $1.20, or 1.59 per cent, to $74.36 per barrel.
Fears of reduced demand from China overshadowed market concerns about potential supply disruptions following Israel’s possible response to Iran’s missile attack on 1 October. Although the US warned Israel against targeting Iranian energy infrastructure, the possibility of disruptions lingers.
China’s deflationary pressures worsened in September, as official data showed on Saturday.
The consumer price index rose just 0.4 per cent, missing expectations, while the producer price index fell by 2.8 per cent year-on-year, the steepest drop in six months. A press conference held by Beijing on the same day left investors uncertain about the scale of a stimulus package aimed at boosting the slowing economy.
Tony Sycamore, an analyst at IG Markets, commented, “The China Ministry of Finance’s briefing on Saturday was a disappointment. The necessary fiscal measures to support growth and boost consumer confidence were notably absent.”
Beijing announced plans to increase debt issuance but did not provide specific figures.
On Friday, both oil benchmarks had risen 1 per cent for the week, driven by concerns over possible supply disruptions in the Middle East and Hurricane Milton’s impact on fuel demand in Florida.
Meanwhile, the US expanded sanctions against Iran, targeting its “ghost fleet” transporting illicit oil following Iran’s 1 October attack on Israel.
In the US, energy firms added oil and natural gas rigs for the first time in four weeks, according to Baker Hughes’ weekly report. The oil and gas rig count, a key indicator of future production, increased by one to 586 in the week ending 11 October.
Hurricane Milton temporarily boosted gasoline consumption in the US due to evacuations, but overall weak demand remained a dominant concern.
On Friday, BP reported a $600 million drop in third-quarter profits, attributing the decline to weak refining margins amid slowing global oil demand.
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