Oil Reverses Course Yet Again On Troubling China Consumer Spending

Last week's key bullish drivers failed to dent the investment gloom: File Image/Pixabay

Oil traders returned to the doldrums for the start of the week, with two key benchmarks dipping on reports of weak consumer spending in China, which just last week supported gains due to its government vowing to stimulate economic growth in the New Year.

Brent on Monday settled down 58 cents at $73.91 per barrel, and West Texas Intermediate also settled down 58 cents at $70.71 per barrel.

Jim Ritterbusch, president at Ritterbusch and Associates, explained the sudden shift in trading behaviour by remarking, "We feel that last week's events have been appropriately priced and that this week will be bringing fewer items capable of supporting oil prices."

Bob Yawger, director of energy futures at Mizuho, added, "It's just a very bearish scenario where there's not a lot hope of demand growth for crude oil."

Yet, last week, Phil Flynn, senior market analyst with Price Futures Group Inc., said, "Hedge funds are starting to buy on tightness of supply in European markets this winter."

But that was forgotten on Monday, as were major global matters that drove trading earlier in the month: Bloomberg noted that, "Crude is set to end the year modestly lower, as expectations of a glut next year and a dour outlook in China overshadow geopolitical tensions in Russia and the Middle East."

Meanwhile, sure to influence trading in the short term is a December 17-18 meeting of the U.S. Federal Reserve, in which it is expected that interest rates will be cut by a quarter of a percentage point and a glimpse will be given regarding possible rate cuts on 2025 and beyond.