Oil prices drop on concerns China's flagging economy to limit demand
Business
Brent crude futures dropped 86 cents to $78.18 per barrel while WTI futures fell 83 cents to $74.73
(Reuters) – Oil prices fell on Monday after data showed China's inflation rate declined and a lack of clarity on the country's economic stimulus plans stoked fears about fuel demand in the world's biggest crude importer.
Brent crude futures dropped 86 cents, or 1.1%, at $78.18 per barrel by 0523 GMT, while US West Texas Intermediate crude futures fell 83 cents, also 1.2%, to $74.73 per barrel.
Both benchmarks gave up their gains from last week, falling by more than $1 a barrel on Monday, before recovering some ground. Brent gained 99 cents last week, while WTI climbed $1.18.
The negative news from China outweighed market concerns over the lingering possibility an Israeli response to Iran's Oct. 1 missile attack could disrupt oil production, though the US has cautioned Israel against targeting Iranian energy infrastructure.
China's deflationary pressures worsened in September, according to official data released on Saturday, and a press conference the same day left investors guessing about the overall size of a stimulus package to revive fortunes in the world's second-largest economy.
"Consumer prices index reading from China indicates a sustained deflationary trend and weaker domestic consumption despite the announcement of the most aggressive monetary stimulus by authorities in September," Priyanka Sachdeva, an analyst at Phillip Nova, said in a note on Monday.
The consumer price index missed expectations, and the producer price index fell at the fastest pace in six months, down 2.8% year-on-year, according to China's National Bureau of Statistics.
IG market analyst Tony Sycamore called the briefing by the Chinese finance ministry on Saturday "a flop."
"The fiscal measures needed to remove downside risks to growth and ignite the animal spirits within Chinese consumers (are) conspicuous in their absence," Sycamore said.
