Brent declines as China stimulus disappoints

The front-month ICE Brent contract has traded $0.52/bbl lower on the day from Friday, to trade at $73.99/bbl at 09.00 GMT.

PHOTO: Oil barrel. Getty Images

Upward pressure:

The re-election of Donald Trump as the 47th President of the US has jittered global markets and put some upward pressure on Brent’s price. This will be Trump’s second term as the elected head of the US.

Oil market traders anticipate that the new government in the US will intensify its crackdown on Iran with stricter sanctions, which in turn could heighten supply concerns and escalate tensions in the Middle East.

“Investors have increased bullish bets on oil amid increasing supply uncertainty,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

China announced its latest economic stimulus package at the National People's Congress (NPC) standing committee meeting on Friday, Reuters reported. The country unveiled a 10 trillion yuan ($1.40 trillion) debt package last week, to support economic growth, but it was not enough to stir a positive market reaction.

China is also bracing for Trump’s administration and its impact on the US-China relations. “Crude oil slumped… amid concerns over China’s outlook, which supported the general weak demand focus,” analysts from Saxo Bank remarked.

Supply disruption issues due to Hurricane Rafael in the US also eased over the weekend, pushing Brent’s price lower.

By Aparupa Mazumder

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