Investing.com — Oil prices fell Monday as more fiscal stimulus from top importer China disappointed, while a hurricane in the Gulf of Mexico appeared to have limited impact on U.S. production.
At 2:30 PM ET (1930 GMT), the stock was down 2.7% at $71.91 per barrel, while the stock was down 3.3% at $68.04 per barrel.
China’s stimulus measures are disappointing
Prices extended losses from Friday after Beijing approved about 10 trillion yuan ($1.4 trillion) in measures aimed at reducing government debt. But a lack of targeted measures for private consumption largely left investors wanting more, especially as weekend data showed continued Chinese deflation.
China’s new stimulus disappointed investors hoping for more, especially as the world’s largest oil importer did not announce measures specifically aimed at improving private spending.
Analysts at ANZ said the stimulus gaps were aimed at addressing potential headwinds from a change in the US administration after Donald Trump won the 2024 presidential election.
Trump has promised to impose steep tariffs on China, heralding more economic headwinds for the country.
Data released over the weekend also showed that China’s consumer inflation contracted in October, while producer inflation contracted for the 25th month in a row.
“Markets continued to be impressed by China’s debt package, which will help ease local governments’ debts and allow them to implement more stimulus measures. Moreover, a Trump presidency is seen as relatively more bearish for energy markets. The main risk to this view, however, is that this will be the case if President Trump chooses to strictly enforce sanctions against Iran. This would eliminate the expected surplus for 2025,” ING analysts said in a note.
Supply fears in the US are easing as Hurricane Rafael weakens
Hurricane Rafael weakened to a tropical storm over the Gulf of Mexico and is expected to weaken further in the coming days.
The storm is now expected to pose a limited threat to oil production in the region, heralding fewer supply disruptions.
Chevron (NYSE:) said Sunday that it has begun redeploying workers and restoring production at Gulf of Mexico platforms that were closed due to Hurricane Rafael.
Chevron operates six platforms in the Gulf of Mexico: Anchor, Blind Faith, Jack/St. Malo, Tahiti, Petronius and Big Foot.
Speculators increased long positions on crude oil
The latest positioning data shows that speculators have increased their net long positions in ICE ahead of the US elections.
Speculators bought 32,238 lots last week, so that they had a net long position of 126,145 lots last Tuesday. Similarly, speculators increased their net long in NYMEX WTI by 48,143 lots to 143,985 lots.
“Softer fundamentals over the course of next year suggest little reason for speculators to enter the market. However, there are clear risks, including OPEC+’s decision to further delay the unwinding of their supply cuts next year,” it added ING added to it.
(Ambar Warrick contributed to this article.)
