Crude oil prices edged lower on Tuesday, retreating from the previous day’s gains, as weaker-than-expected trade data from China added to concerns about global energy demand.
By 6 a.m. CET, Brent futures had dropped 0.37% to $71.90 per barrel, while West Texas Intermediate (WTI) futures slid 0.45% to $68.06 per barrel. The decline underscores persistent worries over sluggish demand in traditional energy markets, driven by a global economic slowdown, particularly in China.
China’s November trade data painted a sobering picture. Exports rose by 6.7% year-on-year, while imports fell 3.9%, both figures falling short of economists’ expectations of 8.7% growth in exports and a 0.9% increase in imports. The data came on the heels of weaker-than-expected consumer price index (CPI) figures, signaling continued soft domestic demand.
China’s Critical Role in Global Oil Markets
Despite the disappointing data, China remains a key player in global crude markets. The world’s largest oil importer averaged 10.94 million barrels per day (bpd) in the first ten months of 2023, marking a 3.7% decline compared to the same period last year. However, November saw a four-month high in imports at 11.62 million bpd, offering a glimmer of optimism.
On Monday, oil prices rallied by over 1% after China’s government pledged to implement more aggressive fiscal and monetary policies in 2025 to bolster its economy. The announcement, made during a meeting of the CPC Central Committee, raised hopes of increased fiscal spending, lower interest rates, and expanded government borrowing to stimulate growth.
Analysts remain cautiously optimistic. A report by S&P Global projected a 1.7% increase in China’s oil demand, reaching 17.59 million bpd by 2025. However, Commodity Insights warned that rising production from the United States, Canada, and OPEC+ could offset demand-driven price gains.
Supply Challenges and OPEC+ Strategy
OPEC+, which supplies nearly half of the world’s oil, recently postponed its plans to reverse production cuts amid faltering global demand. The group delayed increasing output by three months and pushed the timeline for full production recovery to the end of 2026.
“Ultimately, the market’s focus will remain on demand-side factors. China’s economic performance will be the key driver for future oil demand,” said Kyle Rodda, a senior market analyst at Capital.com.
Geopolitical Tensions Provide Limited Support
Geopolitical developments, including heightened tensions in the Middle East and the Russia-Ukraine conflict, have added volatility to oil markets. Over the weekend, Syrian rebels ousted President Bashar al-Assad, while military conflicts between Iran and Israel continue to escalate.
Despite these tensions, the crude market has struggled to sustain significant gains, with analysts pointing to the need for sustained positive signals from China to drive further price recovery.
