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Oil futures fell Monday, but traded off the session’s lows, as traders weighed the prospects for energy demand on the back of a 5% economic growth target set by China’s National People’s Congress.
Price action
-
West Texas Intermediate crude for April delivery
CL00,
+0.28% CLJ23,
+0.28%
fell 15 cents, or 0.2%, to $79.53 a barrel on the New York Mercantile Exchange, off the session’s low of $78.32. -
May Brent crude
BRN00,
-0.07% BRNK23,
-0.07%
fell 34 cents, or 0.4%, to $85.49 a barrel on ICE Futures Europe. -
Back on Nymex, April gasoline
RBJ23,
+0.29%
fell 0.4% to $2.7393 a gallon, while April heating oil
HOJ23,
-2.03%
declined 2.4% to $2.8434 a gallon. -
April natural gas
NGJ23,
-14.02%
slumped 12.8% to $2.623 per million British thermal units, giving back a big chunk of last week’s 18% rally.
Market drivers
Chinese Premier Li Keqiang, the country’s top economic official, on Sunday announced that year’s growth target was “around 5%” following the end of COVID-related controls that kept millions of people at home and triggered protests. The economy grew by only 3% last year, falling well short of the government’s 5.5% target, a miss blamed in large part on lockdowns.
See: Here’s what analysts are saying after China set its growth target at 5%
Oil-market bulls have argued that a surge in demand for crude from China, one of the world’s largest energy consumers, would help drive a rally in 2023.
“Remember, traders were thinking that the fact China has dismantled its COVID-related policies, we are going to see robust demand, but those expectations are hit today with a dose of reality,” said Naeem Aslam, chief investment officer at Zaye Capital Markets, in a note.
Even so, prices for oil have moved up from the day’s lowest price levels.
Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch that the market may not be buying the Chinese growth expectation numbers.
“I suspect that they’re trying to talk down their growth so they can buy commodities cheaper,” he said. “If you look at the surrounding evidence for the Chinese reopening, it’s clear that China most likely is going to aim low so they can exceed expectations.
—The Associated Press contributed to this report.
