Oil prices fell on concerns that China’s stimulus package would be insufficient to maintain the economy, as well as recession fears in the United States.
Brent dropped to $74.17 per barrel. US benchmark West Texas Intermediate (WTI) dropped 0.52% to $71.19 a barrel. Yesterday, the People’s Bank of China announced measures to boost the economy of the world’s top crude oil importer.
Concerns that these incentives may not be sufficient to stimulate economic activity in the country put downward pressure on pricing by increasing market uncertainty.
Meanwhile, statistics provided in the United States raised concerns of a recession in the world’s top oil-consuming country and lowered demand appetite among market participants, supporting the downward direction of oil prices.
According to the data released in the country, the Conference Board Consumer Confidence Index decreased by 6.9 points month-on-month to 98.7 in September, below market expectations.
The decline in consumer confidence in September due to concerns about the labor market was the largest decline recorded since August 2021.
Moreover, the US Richmond Fed Manufacturing Index for September was minus 21, below estimates, while the S&P CoreLogic Case-Shiller US National Home Price Index rose 5% year-on-year in July.
The index pointed out a slowdown in the rate of increase in housing prices despite the record renewal in this period. On the other hand, uncertainty surrounding the US Federal Bank’s (Fed) next moves on interest rates limited further price decline.
While the expectation that the Fed will cut by 75 basis points by the end of the year remains strong, estimates that the bank might slash interest rates by 50 basis points in November have been recorded as 59%.
It is anticipated that the country’s rate drop will weaken the US dollar against other currencies, boosting oil demand.
