• Wednesday, February 21, 2024
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BusinessDay

Brent declines on concern China growth slowing, WTI drops

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Brent crude declined for the third time in four days on concern slower growth in China will reduce demand. West Texas Intermediate narrowed its discount to Brent.

Growth in the world’s second-largest oil consumer faces downward pressure, China’s finance minister Lou Jiwei said at the Group of 20 meeting in Cairns, Australia, according to a statement on the website of People’s Bank of China. Brent also fell after Libya said its biggest oil field may resume production. Brent’s premium to WTI narrowed from a 10-day high.

“The statement by the Chinese finance minister is weighing on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market is very sensitive to negative economic news now and economic fears continue to be our main driver.”

Brent for November settlement slid 72 cents, or 0.7 percent, to $97.67 a barrel on the London-based ICE Futures Europe exchange at 9:07am, New York time on Monday. The volume of all futures traded was about 41 percent below the 100-day average for the time of day.

WTI for October delivery, the US benchmark crude was at a discount of $6.29 to Brent, compared with $6.74 on September 19.

Gasoline futures dropped 1.2 percent to $2.5793 on the Nymex after climbing 2 percent on September 19.

Lou reiterated comments made by Premier Li Keqiang that there won’t be major policy adjustments in response to changes in individual economic indicators. “We are not seeing the stimulus that we thought we would get from China,” said Carl Larry, president of Oil Outlooks and Opinions LLC in Houston.

An index of China’s factory output probably fell to 50 in September, a Bloomberg News survey showed before a preliminary reading from HSBC Holdings plc Tuesday. That would be down from 50.2 for August.

The International Energy Agency earlier this month cut its global oil demand forecast because of weaker growth in China and Europe. Next year’s demand projections for China were reduced by about 100,000 barrels a day to 10.6 million.