Oil prices decline due to concerns over China’s financial measures
Date
10/23/2024 8:11:50 AM
(MENAFN) Oil prices experienced a decline on Tuesday as concerns mount regarding the effectiveness of China's recent economic incentive packages in revitalizing activity. At the same time, ongoing conflicts in the Middle East have provided some support to prices, preventing them from dropping more significantly. As of 10:07 a.m. local time (0707 GMT), brent crude, the international benchmark, saw a decrease of 0.3 percent, trading at USD73.52 per barrel, down from the previous session’s close of USD73.74. Similarly, the US benchmark West Texas Intermediate (WTI) also fell by 0.3 percent, priced at USD69.50 per barrel compared to USD69.75 in the prior session.
Earlier this month, China, recognized as the world’s largest oil importer, unveiled a stimulus package aimed at addressing persistent challenges within its real estate sector. However, experts have expressed skepticism regarding the adequacy of these measures, suggesting they did not meet industry expectations. Among the actions taken by the government was a 25-basis-point reduction in interest rates for 1- and 5-year loans, which serve as benchmarks for corporate and real estate financing. Despite these efforts, the contraction in both China’s real estate and housing markets—a vital component of the country’s economic growth—has put downward pressure on oil prices, leading analysts to predict a decrease in demand from China.
The actual impact of the stimulus on the recovery of the real estate sector is expected to unfold in the coming months as more data becomes available. However, the prevailing challenges in China’s economy remain a significant source of concern, influencing market sentiment and projections for oil demand. As the situation develops, stakeholders are closely monitoring the effectiveness of these measures in stimulating economic activity and their subsequent effects on oil consumption.
In the context of geopolitical tensions, the situation in northern Gaza has escalated, with Israel continuing its military operations despite widespread international calls for a ceasefire. Reports indicate that at least 20 Palestinians were killed in two separate Israeli airstrikes early Tuesday, with witnesses noting the presence of drones surrounding the Khalifa Bin Zayed School. Officials have issued warnings targeting anyone who does not evacuate the area. The fears of a broader regional conflict that could potentially disrupt critical oil supply routes are keeping oil prices from experiencing further declines, as market participants remain vigilant in the face of these uncertainties.
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