Oil prices fell on Monday, weighed down by Chinese economic data considered disappointing, but still contained by the additional sanctions decided by the European Union against “ghost fleet” Russian. The price of a barrel of Brent from the North Sea, for delivery in February, dropped 0.78% to $73.91. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in January, lost 0.81%, to $70.71.
The world’s largest oil importer, China “failed to stimulate its economy for several months”recalled John Kilduff, analyst at Again Capital. Latest indicator to date: growth in retail sales in China slowed in November, according to official figures published Monday, a sign of consumption still sluggish despite a semblance of recovery the previous month. Retail sales grew just 3% year-on-year in November, the National Bureau of Statistics (NBS) announced, a significant slowdown from 4.8% recorded in October. This figure is significantly lower than the forecasts of analysts surveyed by the Bloomberg agency (5%).
Geopolitical risk premium
Beijing has announced in recent months a series of measures to support its economy, including a future easing of its monetary policy. But some experts believe that a more direct budgetary stimulus to boost consumption is necessary to fully restore the health of the Chinese economy. With retail sales, “the market has therefore been called to order”according to Mr. Kilduff. The prices of black gold are however contained by “a geopolitical risk premium” in connection with “new sanctions” against the Kremlin, the analyst stressed. Last Wednesday, European Union member countries agreed to sanction around 50 additional vessels from the “ghost fleet”which allows Russia to export its oil by circumventing Western restrictions.
Made up of around 600 ships, the “ghost fleet” Russian transports nearly 1.7 million barrels of oil per day, London estimated in July. “The recent effort to put the brakes on these fleets (…) has attracted the attention of the market and caused prices to rise”according to Mr. Kilduff. “Crude oil prices appear likely to end 2024 as they started it, with an unfavorable demand outlook… despite elevated geopolitical supply risks arising from ongoing conflicts in the Middle East and in Ukraine”noted Eurasia Group analysts.
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