West Texas Intermediate crude futures saw a similar decline of 0.4 percent to $66.48 a barrel
Oil prices saw a decline on Monday as lackluster inflation data from the leading importer, China, left traders anxious about decreasing demand. Additionally, uncertainty surrounding the effects of U.S. trade tariffs contributed to the downward pressure.
Crude prices had plummeted to levels not seen in more than three years last week, driven by a multitude of negative factors, primarily worries over diminishing demand and rising supply. Indicators of a cooling U.S. economy further compounded the situation.
Brent oil futures set to expire in May decreased by 0.4 percent to $70.10 a barrel, while West Texas Intermediate crude futures saw a similar decline of 0.4 percent to $66.48 a barrel by 22:48 ET (02:48 GMT). Both contracts were trading above the lows reached last week but were still contending with several weeks of significant losses.
China inflation data underwhelms, spurs demand fears
Recent consumer and producer inflation figures from China, released over the weekend, highlighted a persistent deflationary trend in the world’s largest oil importer. The data indicated that China’s economy continues to grapple with weak domestic demand, which negatively affects the country’s consumption of crude oil.
This reading accentuated the urgent need for additional stimulus measures from Beijing, as the Chinese government strives to bolster the economy. Last week, officials in Beijing pledged to implement increased fiscal spending this year to stimulate growth. However, this announcement generated little enthusiasm in oil markets, as details on the planned measures were sparse.
Moreover, China is likely to face economic challenges stemming from U.S. President Donald Trump’s trade tariffs, particularly after he raised duties on Chinese imports to 20 percent last week.
Read more: Oil prices fall to $69.60, near annual lows amid tariff concerns
Trade tariffs, supply fears rattle oil prices
Trump’s comprehensive tariff strategy has introduced further uncertainty into oil markets, as concerns grow that a renewed global trade war could severely impact demand. Traders are apprehensive regarding Trump’s intentions for additional tariffs, especially after he imposed and then unexpectedly postponed 25 percent tariffs on Canadian and Mexican products last week.
In a recent interview with Fox News, Trump did not dismiss the potential for a U.S. economic recession while cautioning that the economy is currently in a transitional phase as he pursues his agenda. Nevertheless, the U.S. President reiterated his threats of imposing more tariffs.
Trump has urged American producers to ramp up domestic energy production, with expectations that reduced energy costs will support his agenda of curbing inflation. Additionally, he has called on Saudi Arabia and its OPEC+ partners to increase their production, with the Organization of Petroleum Exporting Countries and allies having only marginally raised output last week.
