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Oil prices drop as skepticism grows around China's new stimulus plan
(MENAFN) Oil prices fell on Tuesday as skepticism grew around China's new stimulus plan, with investors doubting its ability to significantly boost the economy of the world’s largest oil importer. This has sparked fears of a global oversupply, leading to a dip in the oil market. The international oil benchmark brent crude saw a slight decline of 0.2 percent, trading at USD71.78 per barrel at 10:45 a.m. local time (0745 GMT), down from the previous session's close of USD71.91. Similarly, the U.S. benchmark, West Texas Intermediate, dropped by 0.3 percent, hitting USD67.94 per barrel, compared to USD68.12 at the prior close.
China recently approved a bill allowing local governments with high debt burdens to issue special bonds worth up to 6 trillion yuan (USD840 billion) over the next three years. However, market analysts indicate that the Chinese government’s latest economic measures have failed to meet investor expectations, leading to questions about the effectiveness of the stimulus in boosting both economic growth and oil demand.
In parallel, market players are anticipating the release of the monthly report from OPEC, expected later today, for further insights on oil price trends and demand forecasts. Preliminary data from OPEC suggests a downward revision in global oil demand for this year, forecasting a reduction of 106,000 barrels per day (bpd) compared to the previous estimate. The projected decline in demand is mainly attributed to the economic slowdown in China, which has impacted the global oil market.
Amid these concerns, the industry remains apprehensive that continued declines in oil demand could exacerbate the current risk of oversupply. This scenario has led experts to consider potential adjustments in production to stabilize prices, although much depends on the demand trends in the coming months.
China recently approved a bill allowing local governments with high debt burdens to issue special bonds worth up to 6 trillion yuan (USD840 billion) over the next three years. However, market analysts indicate that the Chinese government’s latest economic measures have failed to meet investor expectations, leading to questions about the effectiveness of the stimulus in boosting both economic growth and oil demand.
In parallel, market players are anticipating the release of the monthly report from OPEC, expected later today, for further insights on oil price trends and demand forecasts. Preliminary data from OPEC suggests a downward revision in global oil demand for this year, forecasting a reduction of 106,000 barrels per day (bpd) compared to the previous estimate. The projected decline in demand is mainly attributed to the economic slowdown in China, which has impacted the global oil market.
Amid these concerns, the industry remains apprehensive that continued declines in oil demand could exacerbate the current risk of oversupply. This scenario has led experts to consider potential adjustments in production to stabilize prices, although much depends on the demand trends in the coming months.
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