BEIJING/SINGAPORE- Oil fell on Wednesday as economic growth in China, the world’s second-largest crude user, slightly missed expectations, raising concerns about future demand increases while US dollar strength dented investor’s risk appetite.
Global benchmark Brent crude futures fell 52 cents, or 0.7 percent , to $77.77 a barrel. US West Texas Intermediate crude futures (WTI) fell 56 cents, or 0.8 percent , to $71.85 a barrel.
Brent crude rose slightly on Tuesday while WTI fell as investors saw fundamentals weakening in the US but the ongoing naval and air conflicts in the Red Sea increased concerns of tankers having to reroute to avoid the area, increasing costs and the amount of time for deliveries.
China’s economy in the fourth quarter expanded by 5.2 percent from a year earlier, which missed analyst expectations and calls into question forecasts that Chinese demand will propel stronger global oil growth in 2024.
The Chinese economic growth figure “doesn’t end the headwinds over crude oil demand, the Chinese outlook for 2024 and 2025 is still bleak,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“(The) oil industry was backing the notion that despite a bumpy recovery, oil demand from China has been resilient and will likely reach record levels in 2024.”
Despite the less-than-expected economic growth, China’s oil refinery throughput in 2023 rose 9.3 percent from a year earlier to a record, indicating the country’s oil demand is elevated if not at the pace that some analysts are expecting.
