By Adedapo Adesanya
Oil futures moved lower on Monday, extending losses from last week despite signs of strong demand from China.
At the session, the Brent crude fell by 0.59 per cent or 42 cents to trade at $68.80 per barrel, while the West Texas Intermediate (WTI) slid by 0.49 per cent or 32 cents to sell at $65.29 per barrel.
China’s industrial output growth quickened in January-February, beating expectations, while its daily refinery throughput data rose 15 per cent from the same period a year earlier, data showed.
Industrial output in the largest crude importer rose to 35.1 per cent in the first two months from a year earlier, up from a 7.3 per cent on-year uptick seen in December, data from the country’s National Bureau of Statistics on Monday.
China has set a modest annual economic growth target, at above 6 per cent, which is below analysts’ forecast of more than 8 per cent this year. It was the only major economy last year to report positive growth, with an expansion of 2.3 per cent.
However, the bearish environment further proved that the market is easing off the high that came from the decision of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to extend most of its supply cuts into April.
Still, analysts said the pact by the 23-producer alliance to rein in output and a rebound to demand due to vaccine roll-outs will keep pushing prices upwards despite any temporary setbacks.
The market also overlooked a massive $1.9 trillion stimulus package passed this month in the United States which raised prospects for global economic growth.
Now, the Biden-administration is considering tax increases on corporations, high earners and fuel, to pay for a sweeping infrastructure plan, which could weigh on oil demand, analysts say.
Sustained higher oil prices are expected to encourage US producers to increase output, which could eventually weigh on prices.
On the vaccination front, more countries in Europe and Asia continue to suspend the coronavirus vaccine developed by AstraZeneca and the University of Oxford following reports of blood clots in some vaccinated people.
Some countries that have suspended the use of the jab include Norway, Iceland, Bulgaria, Luxembourg, Estonia, Lithuania, Thailand, Denmark, Latvia, Spain, among others, with Italy banning the use.
