Oil prices fell sharply as disappointing economic data from China deepened concerns about demand, while broader market sentiment turned risk-averse. Brent crude hovered around $70 per barrel after dipping to its lowest level since 2021 last week, while West Texas Intermediate (WTI) traded below $67.
China’s consumer inflation, which fell more than expected and dropped below zero for the first time in 13 months, underscored the persistent deflationary pressures in the world’s largest crude importer. This development, combined with ongoing global economic uncertainties, added to the bleak outlook for oil demand.
In the U.S., President Donald Trump described the economy as being in a “period of transition” due to his tariff actions, though he refrained from predicting a recession. Federal Reserve Chairman Jerome Powell, speaking on Friday, acknowledged rising uncertainty but indicated that the Fed was not in a rush to cut interest rates.
The crude oil market is facing a confluence of bearish factors, including the escalating global trade war, plans by OPEC and its allies to increase production, and ongoing peace talks over the three-year-long war in Ukraine. These factors have prompted speculators to slash their net-long positions in Brent crude, with the latest reductions being the most significant since July.
Chris Weston, head of research at Pepperstone Group, commented on the cautious tone in Asia, stating that crude prices were moving in tandem with broader market declines. He warned that if Brent fell below last week’s intraday low of $68.33 per barrel, there could be further technical selling, possibly triggering forced liquidations.
Reflecting the weakening market conditions, Saudi Arabia cut prices for oil destined for Asia, its largest market, for the first time in three months. This move came shortly after OPEC+ unexpectedly agreed to increase supply starting in April, following several delays.
The combination of demand concerns and increased supply is keeping the oil market on edge, with traders and analysts closely watching for further signs of weakness.
Related topics:
Chinese Stocks Climb on Hopes for Stimulus Following Economic Target Announcement
Reserve Bank of New Zealand Governor Adrian Orr Resigns Unexpectedly
Oil Prices Decline as OPEC+ Plans Output Boost, U.S. Tariffs Weigh on Sentiment
