Oil Plummets 3% On China's Woes, But Global Demand Decline Refuted By Analyst

EV issues will reportedly keep oil demand healthy beyond 2030: File Image/Pixabay

Oil on Monday resumed its dismal trajectory of the previous session, this time incurring its biggest price drop in two weeks due to on-going disappointment in the effects of China's stimulus measures.

Brent settled down $2.04 or 2.76 percent, at $71.83 per barrel, and West Texas Intermediate settled down $2.34, or 3.32 percent, at $68.04 per barrel; this followed Friday's losses of about 2 percent.

China reported that its consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, despite Beijing unveiling a 10 trillion yuan ($1.40 trillion) debt package to ease local government financing strains by repairing municipal balance sheets and stabilize sputtering economic growth.

Achilleas Georgolopoulos, a market analyst at XM, said, "Chinese economic momentum remains negative."

Bloomberg on Monday noted that, "Time spreads point to a less-tight market: although most gauges are holding in a backwardated structure with nearby contracts at a premium to longer-dated ones, spreads have been narrowing….the gap between WTI's two nearest contracts was at 11 cents a barrel in backwardation, compared with more than 70 cents about a month ago."

Another sign of weakening demand was U.S. gas prices: on Monday they fell to a three year low of $3.03 per gallon on average, the lowest level since May 2021, and Patrick De Haan, head of petroleum analysis at GasBuddy, attributed this to seasonal weakening as "Americans begin to take refuge from falling temperatures."

In other oil news on Monday, Enverus Intelligence Research bucked the trend of pundits predicting the demise of global demand for oil in the foreseeable future and instead said the demand is unlikely to decline 15 percent by 2030, as has widely been forecast.

Al Salazar, analyst for Enverus, told media that one big reason fossil fuel demand will continue is that the EV revolution is starting to face serious roadblocks, with China's renewable energy and EV sector facing a tariff storm from the upcoming Donald Trump presidency, as well as the European Union currently in the process of determining whether to impose duties on imports of Chinese electric vehicles.