Oil prices inched upwards during Monday’s Asian trading session after a steep decline of over 7% the previous week. The sharp drop was largely attributed to concerns over declining demand in China, the world’s largest oil importer, and easing fears of potential supply disruptions in the Middle East.
By 0625 GMT, Brent crude futures increased by 27 cents to reach $73.33 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 31 cents, settling at $69.53 per barrel. However, these small gains made up only a fraction of last week’s losses, with Brent finishing the previous week over 7% lower and WTI recording an 8% drop. These were the steepest weekly declines since early September, reflecting worries over China’s slowing economic growth and a reduced risk premium related to the Middle East.
At an energy conference in Singapore, the CEO of Saudi Aramco remained optimistic about China’s oil demand. He noted that increased policy support in China, aimed at boosting growth, along with rising demand for jet fuel and liquid-to-chemical processes, should support the oil market. In line with expectations, China cut its benchmark lending rates on Monday as part of a broader set of economic stimulus measures. However, the country’s economic growth data released on Friday showed its slowest pace since early 2023, further fuelling concerns about oil demand.
On the geopolitical front, U.S. President Joe Biden suggested on Friday that there might be an opportunity to manage tensions involving Israel and Iran in a way that could de-escalate the ongoing conflict. Nevertheless, over the weekend, tensions intensified as Israel signalled plans to target financial operations linked to Hezbollah in Beirut.
From a supply perspective, U.S. energy firms continued to reduce the number of active oil and natural gas rigs, according to a Baker Hughes report released on Friday. The rig count dropped by one, marking the fourth decrease in five weeks, leaving the total at 585.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
