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Oil falls 1% on concerns over China's economic growth plan

Published 03/04/2024, 09:06 PM
Updated 03/05/2024, 06:05 PM
© Reuters. Miniatures of oil barrels and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/file photo
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By Shariq Khan

NEW YORK (Reuters) -Oil prices fell nearly 1% on Tuesday, pressured by skepticism around China achieving its economic growth target and investors' declining risk appetite despite support from a weaker U.S. dollar.

Brent crude futures settled 76 cents, or 0.9%, lower at $82.04 a barrel, their fourth straight decline. U.S. West Texas Intermediate crude futures fell 59 cents, or 0.8%, to $78.15 a barrel.

Both benchmarks had dropped by more than a dollar during the session.

Weighing on prices, China, the world's biggest oil importer, set an economic growth target for 2024 of around 5%. While the target is similar to last year's goal and in line with analysts' expectations, the lack of big-ticket stimulus plans to prop up the country's struggling economy disappointed investors.

"The growth target is OK, but the missing part is how they want to achieve that - what sort of stimulus is unclear for now," UBS analyst Giovanni Staunovo said.

Risk-off sentiment in the broader financial markets also put pressure on prices, Staunovo added. Gold prices hit a record high on Tuesday on rising bets for a U.S. interest rate cut in June, while Wall Street fell on weakness in megacap stocks. [GOL/] [.N]

Providing some support to oil prices, the U.S. dollar slipped on easing growth in the services sector. A cheaper greenback typically supports oil prices by lifting demand from investors holding other currencies.

"Beyond that, the market is really just looking for the next headline here, with the upcoming storage reports in focus," Mizuho analyst Robert Yawger said.

© Reuters. Miniatures of oil barrels and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/file photo

The first of this week's two U.S. inventory reports, from the American Petroleum Institute industry group, showed U.S. crude stocks rose by 423,00 barrels in the week ended March 1, market sources said, much smaller than the increase of 2.1 million barrels expected by analysts in a Reuters poll.

Official data from the U.S. Energy Information Administration is due on Wednesday at 10:30 a.m. ET (1530 GMT). If the EIA reports a crude storage build, it will be the sixth straight week of rising oil stocks in the country.

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