By Adedapo Adesanya
Oil prices fell for a second straight session on Tuesday as scepticism around China’s economic growth and declining risk appetite countered a weaker US Dollar.
As a result, Brent crude futures depreciated by 75 cents or 0.9 per cent to $82.05 a barrel and the US West Texas Intermediate (WTI) crude futures crashed by 58 cents or 0.7 per cent to $78.16 a barrel.
Weighing on prices, China, the world’s biggest oil consumer, set an economic growth target for 2024 of around 5 per cent.
Meanwhile, analysts noted that while the target is similar to last year’s goal and in line with expectations, the lack of big-ticket stimulus plans to prop up the country’s struggling economy disappointed investors.
China started the year with economic woes unseen since the global financial crisis of 2008-09. The world’s largest oil importer faced a property crisis and local government debt woes persisted, increasing pressure on China’s leaders to come up with new economic policies.
Providing some support to oil prices, the US Dollar slipped on easing growth in the services sector.
The Dollar index, which measures the greenback against six major peers, was down 0.04 per cent to 103.8.
Services industry growth in the world’s largest economy slowed a bit in February amid a decline in employment, according to the Institute for Supply Management (ISM).
Separately, data showed new orders for US-manufactured goods dropped more than expected in January.
A cheaper greenback typically supports oil prices by lifting demand from investors holding other currencies.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) are extending their voluntary oil output cuts of 2.2 million barrels per day into the second quarter to support prices amid global growth concerns and rising output outside the group.
Russia’s announcement that it was cutting its oil output and exports by an additional 471,000 barrels per day in the second quarter surprised some analysts.
Russia’s additional cut is closely correlated with a 400,000 barrels per day drop in its refinery runs.
This largely stemmed from Ukrainian drone strikes on refining assets across Russia.
While there has been little price movement because the OPEC+ decision had been expected, low-sulphur, or sweet, crude markets are tightening.
Dipo Olowookere