Oil prices saw a significant decline at the start of this week’s trading, wiping out all the gains made last week. This drop was due to investor disappointment in China’s announced stimulus plans, which failed to meet market expectations for boosting confidence.
Brent crude futures fell by $1.35, or 1.7%, to $77.69 per barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.32, or 1.75%, to $74.24 per barrel. Last week, Brent had gained 99 cents, while WTI had risen by $1.18.
On the other hand, official data released in China on Saturday showed that deflationary pressures worsened in September. The press conference held the same day left investors uncertain about the size of the fiscal package aimed at reviving China’s sluggish economy.
A strategist at PVM said that China’s announced stimulus measures were not enough to stimulate the markets, and the finance ministry’s promises of additional borrowing over the weekend lacked reassuring details. He also added that producer prices in China continued to decline due to weak consumer demand.
Moreover, the negative news from China outweighed the market’s concerns regarding potential oil production disruptions from geopolitical risks in the Middle East. U.S. sources revealed that Washington is working to mitigate the risks in the region.
