An oil pump jack is shown in a field on June 27, 2024 in Stanton, Texas.
Brandon Bell | Getty Images News | Getty Images
Crude oil futures fell nearly 1% on Thursday as concerns about the health of China’s economy grow after the country’s central bank cut rates twice in a week.
The People’s Bank of China slashed interest rates in a unexpected move Monday, followed by a surprise cut to its medium term facility lending rate on Thursday. China’s government also announced more stimulus to boost weak consumption.
“The semi-panicky moves are increasing concerns that Chinese energy demand may be further into the future than expected,” Bob Yawger, executive director of energy futures at Mizuho Securities, told clients in a note Thursday.
Here are today’s energy prices:
- West Texas Intermediate September contract: $77.04 per barrel, down 57 cents, or 0.73%. Year to date, U.S. crude oil has gained 7.4%.
- Brent September contract: $80.91 per barrel, down 80 cents, or 0.98%. Year to date, the global benchmark is ahead 4.9%.
- RBOB Gasoline August contract: $2.42 per gallon, down 2 cents, or 1%. Year to date, gasoline is up 15.4%.
- Natural Gas August contract: $2.05 per thousand cubic feet, down 6 cents, or 2.93% Year to date, gas is down 18.3%.
“Unlike the US which is poised to cut rates as higher rates tame inflation, China is cutting rates to stimulate the economy and avoid a deflationary spiral,” Yawger wrote.
China’s oil imports were down 10.7% year over year in June, while refined product imports fell 32% over the same period, according to customs data.
“Looking at the high-frequency indicators, the drop is likely driven by continued weakness in Chinese demand and some pick-up in Iranian exports,” Amarpreet Singh, energy analyst at Barclays, told clients in a Thursday note.
Oil prices are down despite declining U.S. crude and gasoline inventories indicating an uptick in demand and second quarter economic growth coming in at a 2.8% rate for the second quarter. The possibility of a cease-fire in the Israel-Hamas is raising hopes that tensions in the Middle East will de-escalate.
