Oil Prices Drop 2% Following China’s New Economic Measures
Oil prices fell on Friday, driven by market disappointment over China’s latest economic measures, which investors found lacking in scope.
The North Sea Brent crude for January delivery dropped 2.33% to $73.87 per barrel, while West Texas Intermediate (WTI) for January fell 2.73% to $70.38 per barrel.
China announced on Friday that its lawmakers agreed to raise the debt ceiling for local governments by $840 billion, a move aimed at stimulating economic growth. However, the market reaction was one of disappointment. The decline in crude prices was largely due to these announcements. Investors had been hoping for a broader stimulus package that would include direct support for consumer spending.
Over recent weeks, China’s government has been unveiling various economic measures, mostly focusing on lowering interest rates, issuing new debt, and easing banking regulations to boost lending. However, analysts believe that unless these policies directly increase household purchasing power, the country’s economic struggles may persist. Notably, China’s crude oil imports fell by 9% in October compared to the same month last year, marking the sixth consecutive month of decline.
Additionally, oil prices were pressured by a perceived reduction in short-term geopolitical risk following the U.S. presidential election. The market anticipates that significant decisions regarding conflicts in Ukraine or the Middle East may be delayed until Donald Trump takes office, further easing concerns over immediate supply disruptions.
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