China's Slow Growth Clouds Oil Demand Outlook Despite Stimulus Efforts

Key Takeaways:

• Crude oil prices have dropped slightly weaker demand in China, despite ongoing stimulus measures.
• Analysts predict oil prices may rise in late 2024 but could go down by the end of 2025.
• The market is closely watching China’s economic recovery and potential impact on global demand.

Petroleum Price: Oil Prices Fell Amid Weak China Demand

• Oil prices fell on Tuesday, paring the previous day’s nearly 2% rise as the top U.S. diplomat renewed efforts to push for a ceasefire in the Middle East, and as slow demand in China, the world’s top oil importer, continued to weigh on the market.
• Brent crude futures for December delivery were down 26 cents, or 0.3%, at $74.03 a barrel at 0046 GMT. U.S. West Texas Intermediate crude futures for November delivery were 2 cents lower at $70.54 a barrel on the contract’s last day as the front month. MCX Crude oil prices opened at 5880 with a fall of 0.88%.

Petroleum Demand and Supply Trends

• China cut benchmark lending rates as anticipated at the monthly fixing on Monday, following reductions to other policy rates last month as part of a package of stimulus measures to revive the economy.
• The move comes after data on Friday showed China’s economy grew at the slowest pace since early 2023 in the third quarter, fueling growing concerns about oil demand.
• China’s oil-demand growth is expected to remain weak in 2025 despite recent stimulus measures from Beijing as the world’s No. 2 economy electrifies its car fleet and grows at a slower pace, the head of the International Energy Agency said on Monday.
• Still, Saudi Aramco is “fairly bullish” on China’s oil demand especially in light of the government’s stimulus package which aims to boost growth, the head of the state-owned oil giant said on Monday.

Petroleum News: Geopolitical Tensions Slowing Global Demand

• Crude oil prices can dip to the low $60s by end-2025 after rising to $80 a barrel in the last quarter (October – December) of 2024 – up nearly 10 per cent from the current levels, suggest analysts at JP Morgan.
• The main players in West Asia — including Saudi Arabia and the United Arab Emirates — have a strong incentive to keep the conflict contained, the JP Morgan report said, given the economic transformation taking place across the Gulf region.
• Brent crude oil prices gained steadily in the last one month, rising from $71 a barrel levels in late September to nearly $81 a barrel in early October as geopolitical tensions in West Asia took center-stage. Since then, they have given up most of their gains and are trading around $73 a barrel now amid demand concerns, and a hope that the geopolitical situation in West Asia may be contained.
• Weak demand outlook, particularly due to worries about an economic slowdown in both China and the US, is weighing on prices, analysts said. Markets, according to analysts’ estimates at Rabobank International, look to be oversupplied in 2025 by about 700,000 barrels per day, which reflects the dramatic move in their forecasts.

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Expert Opinion Oil Price Fluctuations

Crude oil prices have been fluctuating in response to mixed news from the Middle East, as the situation alternates between escalation and de-escalation. The market is expected to rise if there are clearer signs of China’s economic recovery, bolstered by Beijing’s stimulus measures and improvement in U.S. economy following interest rate cuts.