Oil drifts lower as China reforms underwhelm despite OPEC+ support
Oil slipped for a second day on Tuesday as concern over China's plan for growth and uncertainty over the pace of U.S. interest rate cuts offset the prospect of a tighter market due to continued OPEC+ supply restraint.
Oil slipped for a second day on Tuesday as concern over China's plan for growth and uncertainty over the pace of U.S. interest rate cuts offset the prospect of a tighter market due to continued OPEC+ restraint.Brent crude was down 46 cents, or roughly 0.6%, to $82.34 a barrel at 1423 GMT, while U.S. West Texas Intermediate (WTI) was down 44 cents, also about 0.6%, to $78.3. Both benchmarks fell by more than $1 a barrel earlier in the session.
China, the world's biggest oil consumer, set an economic growth target for 2024 of around 5%, similar to last year's goal and in line with analysts' expectations, but the lack of big ticket stimulus plans to prop up its struggling economy disappointed investors.
The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic was reported on Monday as saying.
"Public enemy No 1 of a protracted rally and the $90 oil price is the uncertainty surrounding interest rate cuts," said Tamas Varga of oil broker PVM, adding that concern over China's growth target was adding downward pressure.
Some support came from the prospect of a tighter market after members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday extended their voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter.
"The market has been moving higher in recent weeks amid improving fundamentals. Rising spot prices indicate the physical market has begun to tighten amid a host of other supply-side disruptions," ANZ analysts said in a note on Monday.
Still, the latest round of U.S. reports are expected to show crude increased about 2.6 million barrels last week, while distillates and stockpiles are forecast to decline.
The first of this week's two inventory reports, from the American Petroleum Institute industry group, is due out at 2130 GMT.
