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Oil declined as China’s modest new growth ambitions and the prospect of tighter U.S. monetary policy posed headwinds for global fuel consumption.
West Texas Intermediate traded below US$79 a barrel after gaining more than four per cent last week. China’s Premier Li Keqiang announced a goal for gross domestic product of around 5 per cent at the annual National People’s Congress on Sunday, lower than economists had expected. The nation, the world’s largest oil importer, ended its restrictive Covid Zero policy late last year.
“The GDP forecasts from China were a rather low target and may be a potential reason for oil’s weakness today,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “But we expect China will come in a bit above target. If Chinese imports rise and Russian production falls, prices should move higher from here.”
Oil has held within a tight US$10 range since the start of the year, whipsawed by optimism over China’s recovery and expectations of further interest rate hikes from the U.S. Federal Reserve. Saudi Arabia has signaled confidence in the near-term outlook, raising most of its prices for crude shipments to Asia and Europe for April.
Investors will be watching speeches from Fed Chair Jerome Powell and jobs data this week for clues on the path for monetary tightening. Federal Reserve Bank of San Francisco President Mary Daly reiterated in a speech on Saturday the central bank’s willingness to leave borrowing costs higher for longer.
