Oil prices extended their decline on Monday driven by apprehensions about sluggish demand in China despite ongoing geopolitical tensions in the Middle East and Russia.
Brent oil, against which Nigerian oil is priced, dipped by 12 cents to $81.96 a barrel while U.S. West Texas Intermediate (WTI) dropped 21 cents to $77.8.
The downturn in oil prices was primarily attributed to concerns over softening demand in China, the world’s largest crude importer.
Bearish data from Chinese markets indicated a weakening appetite for crude, amplifying worries about global demand dynamics.
Hiroyuki Kikukawa, president of NS Trading’s unit at Nissan Securities, highlighted that despite the extension of supply cuts by OPEC+, concerns over China’s demand overshadowed market sentiments.
Mixed signals from U.S. jobs data further prompted traders to adjust their positions, contributing to the downward pressure on oil prices.
Geopolitical risks persistently loom over the market, with tensions escalating in the Middle East and Russia.
Hamas chief Ismail Haniyeh accused Israel of stalling ceasefire talks, while Moldova’s president expressed concerns about Russia’s intentions to destabilize the region.
Although OPEC+ agreed to extend voluntary oil output cuts into the second quarter, concerns about China’s demand trajectory remain dominant.
Analysts at ANZ Research underscored the potential tightening of the market as demand gradually recovers from its seasonal lull.
As the delicate balance between demand concerns and geopolitical tensions unfolds, the trajectory of oil prices remains uncertain, with market participants closely monitoring developments in both China and geopolitical hotspots around the world.