Investors were left disappointed with the failure of Beijing’s stimulus package to boost the market, as prospects for fuel demand growth in the world’s second-largest oil consumer remained uncertain. On Monday (November 11), global oil prices fell by about 2%, while the U.S. dollar saw a slight gain.
As of 14:44 Greenwich Mean Time, Brent crude futures dropped by $1.83, a decrease of 2.48%, to $72.04 per barrel, while U.S. West Texas Intermediate crude futures fell by $1.91, a drop of 2.71%, to $68.47 per barrel. Both benchmarks experienced a decrease of over 2% compared to Friday (November 8).
Meanwhile, the U.S. dollar index crossed the highs set after the November 5 U.S. presidential election, as markets awaited clarity on future U.S. policies.
The U.S. dollar index measures the value of the dollar against a basket of foreign currencies.
The strengthening dollar makes dollar-denominated commodities, such as oil, more expensive for those holding other currencies, often putting pressure on prices.
According to data released last Saturday (November 9), despite Beijing’s attempts to stimulate the economy, China’s consumer price index (CPI) for October saw the smallest increase in four months, while producer prices continued to decline.
Achilleas Georgolopoulos, market analyst at brokerage firm XM, stated, “China’s inflation data is weak once again, with markets concerned about deflation, especially as the annual change in the producer price index plunges further into negative territory… (indicating) the Chinese economy is still in negative territory.”
Tamas Varga, analyst at oil brokerage firm PVM, expressed that the latest supportive measures would not revive China’s oil demand growth or crude imports.
“After the U.S. presidential election last week, attention is gradually shifting back to fundamentals,” Varga remarked.
President-elect Trump promised to increase import tariffs during his campaign to boost the U.S. economy, casting shadows on the global economic outlook. However, expectations of his potential intensification of sanctions on OPEC oil-producing countries Iran and Venezuela and cutting global oil supplies somewhat led to a rise in oil prices by over 1% last week.
(Partial information in this article is based on reports from Reuters)