Chinese oil demand is back in the spotlight, exerting pressure on oil prices to start the new trading week with a loss, extending losses booked last week.
"Worries over weak demand in China outweighed the extension of supply cuts by OPEC+," a Nissan Securities analyst told Reuters.
The worries came after the research arm of state-owned Chinese energy major CNPC forecast last week that China is entering a slow oil demand period thanks to the uptake of electric cars and LNG-fueled trucks.
Growth in EV sales and LNG-powered trucks would shave between 10% and 12% off the country's demand for gasoline and diesel just this year, Lu Ruquan, president of CNPC's Economics and Technology Research Institute, said last Friday.
There are also pessimistic expectations about the coming inflation report in the U.S., due to be released tomorrow. Economists polled by Reuters expect the February rate to have remained unchanged at 3.1%. This would interfere with the Fed's plans to start cutting interest rates, many believe. Lower rates normally boost oil demand.
On the bullish side, geopolitical risk remains the biggest factor although disruption of supply has yet to materialize amid continued fighting in the Middle East.
"We see the current price level as just about right for the present demand and supply dynamics," Han Zhong Liang, an investment strategist at Standard Chartered, told Bloomberg. "Unless there's a significant shift in either side of the equation, such as a flare-up of Middle East tensions that significantly impacts supply, oil is likely to keep trading rangebound."
This week will see the latest releases of monthly oil market reports from OPEC and the IEA, which should provide a glimpse into the oil market balance. The EIA is releasing its latest Short-Term Energy Outlook this week as well. OPEC's report is out on Tuesday, followed by STEO on Wednesday, and the IEA's Oil Market Report on Thursday.
Early on Monday morning, WTI had fallen to $77.91 while Brent was trading at $82.10.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
summer demand
Western disinformation media concerns about Chinese oil demand growth is part and parcel of market manipulations by oil traders, speculators and the United States to create a false impression about a glut in the market and a slowing down Chinese economy aimed to depress oil prices for the benefit of the US economy and the refilling of the SPR.
A rise in EV sales in China has neither affected the steep Chinese coal demand nor will it affect oil demand given China's energy security and its growing economy.
These false and monotonous rumours about the Chinese economy will lead you nowhere.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert