Commodities and Futures News

Oil prices dip as markets weigh China rate cut, weak economic outlook

2023.06.19 23:28


© Reuters.

Investing.com– Oil prices retreated in Asian trade on Tuesday as investors weighed another interest rate cut in China against increasing pessimism over its economic prospects this year, while caution over U.S. monetary policy also persisted.

fell 0.3% to $75.86 a barrel, while fell 0.6% to $71.08 a barrel by 22:28 ET (02:28 GMT). 

Both contracts retreated on Monday after concerns over China largely offset signs of tighter supply from Saudi Arabian production cuts and dropping U.S. oil rig numbers. 

Chinese economic concerns weigh on oil

Growing concerns over a Chinese economic recovery weighed on oil prices this week, with the latest cut in the country’s benchmark (LPR) coming after a slew of major investment banks, most recently Goldman Sachs (NYSE:), cut their outlook for the Chinese economy this year. 

China’s LPR cut on Tuesday was largely anticipated by markets, given that the country had trimmed short and medium-term lending rates last week, following several disappointing economic indicators for April and May.

While the country has been importing and refining oil at a near record pace, markets fear that steady inventory builds and weak fuel demand, especially as economic growth worsens, could largely stymie China’s appetite for crude imports later this year. 

The world’s largest oil importer is struggling to shore up economic growth amid a downturn in its manufacturing and property sectors, which are China’s biggest economic drivers. The two sectors have failed to recover despite the lifting of anti-COVID restrictions earlier this year.

Fed in focus as Powell testimony looms

Anticipation of a kept oil markets antsy this week, with Powell likely to offer up more cues on U.S. interest rates and the economy when he speaks before Congress on Wednesday.

The prospect of rising U.S. rates also weighed heavily on crude this year, as traders remained concerned that worsening economic conditions, amid tight monetary policy, could dent oil demand.

U.S. supply is expected to tighten in the near-term, especially as fuel demand increases and as U.S. energy firms reduced the number of operational oil rigs for a seventh straight month.

But the prospect of a U.S. recession, buoyed by weak economic indicators from the country, largely offset any optimism over tighter supply.

Global crude supplies also remain high despite recent production cuts from Saudi Arabia. Recent reports suggested that Iranian crude exports hit five-month highs in May, while Russian crude shipments to major Asian importers- India and China- remained robust through the month.

Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 74,789.04 0.34%
ethereum
Ethereum (ETH) $ 2,841.34 9.07%
tether
Tether (USDT) $ 1.00 0.13%
solana
Solana (SOL) $ 188.82 1.45%
bnb
BNB (BNB) $ 599.74 2.88%
usd-coin
USDC (USDC) $ 0.999974 0.28%
xrp
XRP (XRP) $ 0.559074 4.56%
dogecoin
Dogecoin (DOGE) $ 0.193736 7.10%
staked-ether
Lido Staked Ether (STETH) $ 2,839.97 9.04%
tron
TRON (TRX) $ 0.162038 0.47%
cardano
Cardano (ADA) $ 0.37117 2.82%
the-open-network
Toncoin (TON) $ 4.91 2.15%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,377.45 10.14%
shiba-inu
Shiba Inu (SHIB) $ 0.000019 2.42%
avalanche-2
Avalanche (AVAX) $ 27.21 3.18%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 74,687.01 0.20%
weth
WETH (WETH) $ 2,844.02 9.30%
chainlink
Chainlink (LINK) $ 12.45 5.54%
bitcoin-cash
Bitcoin Cash (BCH) $ 376.57 0.64%
sui
Sui (SUI) $ 2.27 2.75%
polkadot
Polkadot (DOT) $ 4.14 1.49%
leo-token
LEO Token (LEO) $ 6.11 0.14%
usds
USDS (USDS) $ 1.00 0.61%
uniswap
Uniswap (UNI) $ 9.08 1.43%
litecoin
Litecoin (LTC) $ 70.88 1.09%
wrapped-eeth
Wrapped eETH (WEETH) $ 2,992.26 9.46%
near
NEAR Protocol (NEAR) $ 4.21 0.51%
aptos
Aptos (APT) $ 9.74 5.08%
pepe
Pepe (PEPE) $ 0.00001 9.45%
bittensor
Bittensor (TAO) $ 531.71 3.91%
internet-computer
Internet Computer (ICP) $ 7.97 0.28%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.40 1.38%
dai
Dai (DAI) $ 0.999964 0.12%
ethereum-classic
Ethereum Classic (ETC) $ 20.28 5.45%
kaspa
Kaspa (KAS) $ 0.120666 0.76%
monero
Monero (XMR) $ 162.71 2.35%
stellar
Stellar (XLM) $ 0.098228 1.47%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.04%
whitebit
WhiteBIT Coin (WBT) $ 19.24 1.04%
aave
Aave (AAVE) $ 184.63 20.00%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.342191 6.12%
blockstack
Stacks (STX) $ 1.70 0.97%
okb
OKB (OKB) $ 39.74 2.02%
dogwifcoin
dogwifhat (WIF) $ 2.37 4.40%
first-digital-usd
First Digital USD (FDUSD) $ 0.997621 0.43%
crypto-com-chain
Cronos (CRO) $ 0.086669 5.67%
arbitrum
Arbitrum (ARB) $ 0.575783 9.61%
filecoin
Filecoin (FIL) $ 3.77 3.47%
celestia
Celestia (TIA) $ 5.23 12.09%
mantle
Mantle (MNT) $ 0.61748 5.62%