New York futures fell 9.4% on Friday, but are still on track for weekly gain. Beijing has not set a target for economic growth this year due to “great uncertainty” over the coronavirus, although it has announced new stimulus spending.
Meanwhile, a new Hong Kong security law has fueled tensions between the United States and China. The United States has condemned China’s plans to pass sweeping national security laws, with Secretary of State Michael Pompeo calling the proposal “disastrous.”
China’s abandonment of its growth target “implies a certain degree of economic weakness,” which could hurt oil prices, said Bob Yawger, director of the futures division of Mizuho Securities USA. “This is a very negative situation for the demand for crude oil.”
In the oil market, there are early signs that any recovery will be long and slow. The research unit of the state-owned China National Petroleum Corp. said fuel demand in the country will drop 5% this year.
In addition, the shutdowns of oil production in the United States have peaked, said Mark Rossano, an analyst at consulting firm Primary Vision.
However, the US benchmark crude should post a fourth weekly gain. Reductions in production by major producers have helped reduce inventories globally as OPEC + strives to implement the promised reductions.
This month’s alliance program is set to cut daily crude oil production by 9.7 million barrels, or about 10% of world supply. Meanwhile, in the United States, stocks at the Cushing, Oklahoma storage center fell the most last week.
- Crude West Texas Intermediate for July delivery lost US $ 1.23 to US $ 32.69 per barrel at 11:02 a.m. in New York.
- Brent crude for July settlement fell from US $ 1.60 to US $ 34.46 per barrel on the ICE Futures Europe stock exchange
- China’s demand for oil at the start of the month was likely 92% of its level at the same time last year, said IHS Markit, and full-year consumption is forecast to be about 8% lower than that of 2019.
More news on the oil market
- America doubles imports of key ingredient to produce premium gasoline from India before summer after domestic refiners cut production in response to collapsed demand virus.
- Cheaper gasoline in nearly two decades won’t keep nervous Americans on the road for Memorial Day weekend as fears of Covid-19 and economic problems continue to weigh on drivers potential.
- Royal Dutch Shell Plc and Eni SpA have successfully dismissed a billion dollar US lawsuit against them for allegations of corruption in Nigeria.
– With the help of Alex Longley.