Brent declines as Chinese oil demand worries resurface

The front-month ICE Brent contract has moved $0.76/bbl lower on the day from Friday, to trade at $77.71/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent crude’s price found some upward pressure over escalating tensions in the Middle East. Global oil market traders and analysts are factoring in Israel’s retaliatory move against Tehran’s missile attack on 1 October.

“Israel’s government has yet to decide how to retaliate against Iran for a missile attack,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked. “The lingering possibility of Iran’s oil output being disrupted has left the market on edge,” he added.

On the calendar today is the release of OPEC’s monthly oil market report. Analysts expect an optimistic oil demand growth figure from the oil producers’ group will provide some boost to prices.

The report is also expected to show better supply compliance from members including Iraq, Kazakhstan, and Russia. Earlier this month, the Saudi Arabia-led group advised the members to “fully implement” output cuts pledged earlier this year.

“Members that have been over-producing are expected to cut deeper than current quotas to make up for the extra barrels they produced,” Hynes said.

Downward pressure:

Brent’s price started the week on a softer note as China’s latest economic briefing over the weekend “lacked any concrete new measures to support struggling oil demand in the country,” two analysts from ING Bank remarked.

In a press conference, Chinese Finance Minister Lan Foan announced new measures, stating that Beijing would help local governments tackle debt and offer subsidies to people with low incomes, without mentioning the size of the fiscal stimulus, Reuters reported.

“A highly anticipated briefing by China’s finance minister on Saturday disappointed investors that were hoping for a concrete fiscal stimulus figure,” VANDA Insights’ founder and analyst Vandana Hari said.

By Aparupa Mazumder

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