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Oil prices decline on fears of deflation in China

Oil prices decline on fears of deflation in China

The world’s largest consumer of crude oil will publish its inflation data on Wednesday.

Traders were cautious ahead of the release of China’s macroeconomic data on Wednesday.

Photo: Reuters

The prices of Petroleum were trading lower on Tuesday as investors await data on inflation of USA and Chinaand the outcome of the monetary policy meeting of the Federal Reserve (Fed) since price changes could affect demand.

The Brent crude oil futures They fell 14 cents, or 0.2%, to $81.49 a barrel by 1121 GMT, after recovering from a close of $77.52 last week. That close, the lowest since February, came as investors worried about oversupply and low demand for the rest of 2024.

US crude oil futures West Texas Intermediate (WTI)for their part, fell 18 cents, or 0.2%, to $77.56.

Traders were cautious ahead of the release of China’s macroeconomic data on Wednesday. “The possible adverse macroeconomic factor for oil prices Petroleum will be China’s inflation data,” said Kelvin Wong, market analyst at OANDA. If the Chinese producer price index disappoints by falling 2% year-on-year or more, “it suggests that the spiral of deflationary risk remains entrenched in China, which in turn may likely see lower demand for oil,” he added.

Deflation can cause shopping to dry up as businesses and consumers expect to pay less later as prices fall, affecting economic activity and dampening demand for goods. Petroleum.

Meanwhile, the fall in Saudi crude oil exports to China for the third consecutive month it also put further pressure on prices.

On Monday, prices rose about 3%, hitting one-week highs, boosted by expectations that the summer holiday season in the northern hemisphere will boost demand for fuel. Some analysts said the rise would likely be short-lived given the prospect that interest rates in the United States will remain high due to higher-than-desired inflation.

Tomorrow, US consumer price index data for May will be released and the Federal Reserve’s two-day monetary policy meeting will conclude.

The prospect of the United States moving to build up its strategic reserves if WTI remains below $79 provided support to the price of Petroleumsaid Hiroyuki Kikukawa, president of NS Tradinga unit of Nissan Securities.

The United States could accelerate the pace of replenishment of the Strategic Petroleum Reserve as reserve maintenance is completed by the end of the year, the Energy Secretary told Reuters last week, Jennifer Granholm.

Source: Ambito

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