Oil prices dropped as weak Chinese inflation data pointed to declining demand, and this, together with other bearish factors in global markets, put pressure on prices. Brent Crude sat around $70 per barrel, and WTI Crude plunged below $67, levels last seen in 2021.
This is because China, the world’s biggest crude importer, has just announced that inflation has dropped for the first time in 13 months and the rate is now negative. This, in turn, points to deflationary pressures and, therefore, weak oil demand.
In the meantime, US President Donald Trump said the economy is in a “period of transition” due to recent tariff actions. And Federal Reserve Chair Jerome Powell also acknowledged economic uncertainties but said there’s no urgent need for rate cuts.
Oil markets were also under pressure from escalating global trade tensions, the possibility of OPEC producing more, and peace talks on the Ukraine war that further damped crude’s outlook.
Chris Weston, the head of research at Pepperstone Group, said that Brent could dip below $68.33 per barrel, which may lead to technical and forced selling.
From the perspective of demand prospects, weaker demands, therefore, Saudi Arabia cut oil prices for Asia for the first time in three months a day after OPEC agreed to raise output from April after multiple delays that only worsened market volatility.
