Oil Prices Fall Despite China Stimulus Measures

Oil prices fell in Asian trade on Monday as more fiscal stimulus measures from China largely underwhelmed, while a hurricane in the Gulf of Mexico had limited impact on U.S. production.

Prices extended losses from Friday after Beijing approved about 10 trillion yuan ($1.4 trillion) in measures aimed at lowering government debt levels. However, the lack of targeted measures for private consumption left investors wanting more, especially as data over the weekend showed persistent Chinese deflation.

In the U.S., fears of immediate disruptions in production eased as Hurricane Rafael weakened into a tropical storm after making landfall in Cuba. Nonetheless, several energy firms in the Gulf of Mexico continued to keep production offline.

Brent oil futures expiring in January fell 0.2% to $73.72 a barrel, while West Texas Intermediate crude futures fell 0.3% to $69.90 a barrel by 20:38 ET (01:38 GMT).

China Stimulus Underwhelms

China’s new stimulus measures disappointed investors who were hoping for more, as the world’s biggest oil importer did not announce any initiatives specifically aimed at improving private spending.

Analysts at ANZ mentioned that these gaps in stimulus were likely to accommodate potential headwinds from a shift in U.S. administration, following Donald Trump’s victory in the 2024 presidential elections.

Trump has promised to impose steep import tariffs on China, which could lead to more economic challenges for the country. Data released over the weekend showed Chinese consumer inflation contracted in October, while producer inflation diminished for the 25th consecutive month.

ANZ analysts are now looking forward to China’s Politburo meeting and the Central Economic Work Conference in December for further information on stimulus.

U.S. Supply Fears Abate as Hurricane Rafael Weakens

Hurricane Rafael has weakened into a tropical storm over the Gulf of Mexico and is expected to diminish further in the coming days.

The storm now poses a limited threat to oil production in the region, resulting in fewer supply disruptions.

In the U.S., uncertainty exists over the outlook for production, which is anticipated to possibly increase under Trump’s administration. However, Trump is also expected to impose stricter sanctions against Venezuela and Iran, which could potentially cut off some global oil supply.