Brent slips as concerns grow over slowing Chinese demand

The front-month ICE Brent contract has lost $0.67/bbl on the day, to trade at $73.28/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent’s price has found some support as the oil market and the broader financial markets eagerly await the upcoming US Federal Reserve’s (Fed) Federal Open Market Committee meeting.

The Fed is widely expected to implement its final interest rate cut for 2024 during tomorrow’s meeting. Lower interest rates in the US tend to make dollar-denominated commodities such as oil more affordable, bolstering demand.

“Commodity [oil] prices traded steady this morning ahead of the final Federal Reserve meeting for the year,” two market analysts from ING Bank said.

Additionally, twelve European countries are set to tighten the crackdown on tankers that move millions of barrels of Russian oil around the world, Bloomberg reports. Oil market analysts expect Brent to rise following an official statement outlining these measures.

“Reports that the European Union sanctioned 52 additional tankers largely shipping Russian crude offered some support for prices,” ING Bank’s analysts said.

Downward pressure

Brent lost some of its previous session’s gains as concerns over demand from China continued to weigh on the market, following the recent release of weak Chinese economic data.

China’s National Bureau of Statistics (NBS) reported that the country’s retail sales growth came in weaker than unexpected in November, rising only by 3% year-on-year, and noting a sharp drop from the 4.8% growth achieved in October.

Besides, some market analysts believe that China's oil consumption may have already peaked last year, driven by the widespread adoption of electric and gas-powered vehicles.

This shift has further dampened demand growth in the world’s second-largest oil consumer.

“China’s oil consumption is transforming from a tailwind to a headwind for oil consumption and prices as the country’s transport revolution accelerates,” independent oil market analyst John Kemp said.

By Aparupa Mazumder

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