In the wake of growing apprehensions over reduced oil consumption in China, a key player in the global oil market, oil prices witnessed a consecutive decline for the second day.
The current market scenario reveals Brent crude trading at $82.16 per barrel, marking a 0.52 per cent decrease, while West Texas Intermediate crude (WTI) is trading at $77.9 per barrel, down by 0.6 per cent from the previous close.
China, a significant oil consumer, declared its commitment to overhaul its economic development model and address industrial overcapacity concerns.
Alongside these initiatives, China set its economic growth target for 2024 at approximately 5 per cent, a figure consistent with last year’s goal and in alignment with analysts’ predictions, according to Reuters.
However, achieving this growth target may prove challenging this year, as analysts point out that China’s favourable base effect in 2023, resulting from the pandemic-affected 2022, may not be replicable. This potential hurdle has raised concerns and could impact investor sentiment.
China, being the world’s largest crude importer, also announced intentions to intensify the exploration and development of oil and natural gas resources.
Simultaneously, there is a commitment to tighten control over fossil fuel consumption, reflecting the nation’s dual focus on energy development and environmental responsibility.
While anxieties regarding China’s demand outlook contributed to the downward pressure on oil prices, other factors provided support.
Major oil producers’ decisions to reduce output and geopolitical tensions arising from the Israel-Gaza conflict played a role in sustaining crude prices.
Over the weekend, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) extended their voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter.
This decision aimed to bolster prices amidst global growth concerns and increased production outside the OPEC+ alliance.