Beijing – Oil prices dropped by more than $1 per barrel, falling over 1.5% early Monday, as weaker-than-expected inflation data from China and uncertainty surrounding Beijing’s stimulus measures raised concerns about future demand.
By 0020 GMT, Brent crude fell by $1.26 (1.59%) to $77.78 per barrel, while U.S. West Texas Intermediate (WTI) dropped $1.20 (1.59%) to $74.36 per barrel.
Although tensions in the Middle East, including a possible Israeli response to an Iranian missile attack earlier in the month, had the potential to disrupt oil supplies, market attention remained focused on China’s economic outlook. The U.S. government has urged Israel to avoid targeting Iranian oil infrastructure.
Official data from China, released on Saturday, showed growing deflationary pressures in September. Investors were left uncertain after a government press conference on the same day did not provide clear details about the size of an anticipated economic stimulus package aimed at boosting China’s struggling economy.
The consumer price index increased by just 0.4%, falling short of expectations, while the producer price index saw a sharp 2.8% year-on-year decline, marking the fastest drop in six months, according to the National Bureau of Statistics.
“The lack of significant fiscal measures from the Chinese government is leaving downside risks to growth unaddressed,” noted Tony Sycamore, an analyst at IG Markets, in a statement. “This is disappointing for markets expecting more aggressive action to boost consumer confidence.”
China announced plans to increase debt issuance but did not provide specific financial figures.
Both Brent and WTI crude ended last week with a 1% gain as investors weighed potential supply disruptions in the Middle East and the impact of Hurricane Milton on U.S. fuel demand.
Meanwhile, the U.S. government expanded sanctions on Iran last Friday, targeting a fleet of ships involved in smuggling oil globally in response to Iran’s Oct. 1 missile strike on Israel.
In the U.S., energy firms increased the number of oil and gas rigs by one last week, marking the first rise in four weeks, based on data from Baker Hughes, a leading energy services company.
Hurricane Milton temporarily boosted fuel demand in the U.S. due to evacuations that spurred higher gasoline consumption. However, weak demand fundamentals remain a concern for the broader oil market outlook.
BP (NYSE: BP) reported a $600 million drop in third-quarter profits on Friday, citing weak refining margins and a slowdown in global oil demand.
