Disappointing Chinese economic data pushes oil prices down

Oil prices fell on Wednesday after economic growth data in China, the world’s second-largest consumer of crude oil, came in slightly below expectations, raising concerns about future demand increases, while the strength of the dollar affected investors’ risk appetite.

According to Reuters, Brent crude futures fell 58 cents, or 0.7%, to $77.71 per barrel by 0720 GMT. US West Texas Intermediate crude futures fell 61 cents, equivalent to 0.8%, to $71.79 per barrel.

Brent crude rose slightly on Tuesday while West Texas Intermediate crude fell as fundamentals weakened in the United States, but the ongoing conflict in the Red Sea raised concerns that tankers would be forced to change course to avoid the region, increasing costs and the amount of time needed for delivery.

The Chinese economy achieved 5.2% growth on an annual basis in the last quarter of last year, which was below analysts’ expectations and raised questions about expectations that Chinese demand will drive global oil price growth in 2024.

Last year, oil refinery production in China rose by 9.3 percent on an annual basis, reaching a record level despite economic growth that was less than expected, indicating that demand for oil is still high, if not at the pace that some analysts already expect.

At the same time, the dollar hovered near a one-month high on Wednesday after comments from Federal Reserve officials reduced expectations for a significant interest rate cut. The rise in the dollar reduces demand for dollar-denominated oil for buyers who pay in other currencies.

The market continues to monitor the situation in the Red Sea, as investors worry about the risk of supply disruption, even as oil tankers divert away from the waterway.

On Tuesday, the United States launched new strikes on the Yemeni Houthi group allied with Iran, after a Houthi missile targeted a Greek ship in the Red Sea.

The major British oil company Shell suspended shipments through the Red Sea after the start of the American and British strikes, but the American producer Chevron maintained its routes in the Red Sea.