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11.11.2024

Oil prices fell by more than 1%, continuing Friday's decline

The price of oil futures fell by about $1 per barrel, as the latest weak economic data from China (the largest importer of oil) increased concerns about oil demand. 

On Saturday, the National Bureau of Statistics of China said that CPI growth slowed to 0.3% per annum in October from 0.4% per annum in September. Moreover, this was the weakest in four months. Economists had expected an increase of 0.4% per annum. Core CPI that excludes prices of food and energy rose to 0.2% per annum from 0.1% per annum in September. Meanwhile, the producer price index fell by 2.9% per annum after falling by 2.8% per annum in September. Consensus estimates suggested a decrease of 2.5% per annum. Meanwhile, today's report from the People's Bank of China (PBoC) showed that in October, Chinese banks provided new loans in yuan in the amount of 0.500 trillion yuan. Therefore, credit growth slowed sharply compared to September (1.590 trillion yuan), despite the economic stimulus measures from the Chinese government. It was the lowest magnitude of new yuan loans extended in the period since 2009. Economists had expected lending to grow by 0.700 trillion yuan. New yuan loans totalled 16.52 trillion yuan for the first ten months of the year. This week, investors will focus on retail sales and industrial production data, which will assess whether Beijing's various attempts to stimulate the economy have any real impact on demand. Oil consumption in China has barely grown in 2024 as its economic growth has slowed, gasoline use has declined with the rapid growth of electric vehicles and liquefied natural gas has replaced diesel as a truck fuel.

Easing concerns about potential supply disruptions from storm Rafael in the U.S. Gulf of Mexico, as well as a stronger U.S. currency, also put pressure on oil prices. The US Dollar Currency Index (DXY) rose by 0.28% to 105.29, making commodities priced in the currency less appealing.

Market participants are also preparing for the publication of a slew of oil market forecasts. The Organization of Petroleum Exporting Countries will present its forecast tomorrow, and on Wednesday the U.S. Energy Information Administration will publish its short-term forecast. Meanwhile, a forecast from the International Energy Agency will be released on Thursday.

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