Oil prices experienced a decline for the second consecutive day as concerns mounted over China’s economic growth trajectory and uncertainty persisted regarding U.S. interest rate adjustments.
Brent crude slipped by 42 cents or 0.5% to $82.38 per barrel while U.S. West Texas Intermediate (WTI) dropped by 39 cents or 0.5% to settle at $78.35.
These movements occurred amid China’s announcement of a 5% economic growth target for 2024, akin to the previous year’s objective and aligning with analysts’ projections.
However, the absence of substantial stimulus initiatives to bolster the struggling economy disappointed investors.
Tamas Varga, an oil broker at PVM, pointed out that the primary hindrance to a prolonged rally and reaching the $90 oil price mark stemmed from uncertainties surrounding potential interest rate cuts.
This uncertainty coupled with concerns regarding China’s growth outlook exerted downward pressure on oil prices.
Also, the U.S. Federal Reserve, as reported by Atlanta Fed President Raphael Bostic, expressed a lack of urgency in implementing interest rate cuts, given the flourishing economy and job market.
Despite these factors, some support emerged from expectations of a tighter market following OPEC+ members’ decision to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter.
Analysts from ANZ noted an uptick in spot prices, suggesting a tightening physical market amidst various supply-side disruptions.
However, anticipation of an increase in crude stocks by approximately 2.6 million barrels in the latest U.S. inventory reports, alongside projections of declines in distillates and gasoline stockpiles, tempered optimism in the market.
The American Petroleum Institute’s initial inventory report was expected later in the day, adding another layer of anticipation to market dynamics.