Crude oil price edged lower earlier on Tuesday as the bears retested the critical level of $90. Concerns over Chinese demand have continued to weigh on the commodity. While the bears remain in control, the easing of the US dollar has helped boost prices. As at the time of writing, Brent oil was at $91.23; down by 0.19%. At the same time, WTI futures remained in a consolidation pattern for the sixth session in a row.
Concerns over Chinese demand
Fears over the probable decline in demand from China remain one of the key bearish drivers of crude oil price. On the one hand, the country’s GDP for Q3’22 came in higher than expected. The economy grew by 3.9% after a contraction of 2.7% in the previous quarter.
Even so, this level of growth remains significantly below the official target of about 5.5%. What’s more, economists are of the opinion that the Chinese economy will continue to experience challenges for the remainder of the year. This forecast is founded on President Xi Jinping’s stringent Covid-zero strategy.
Subsequently, there are persistent concerns that crude oil demand from the Asian country will be relatively weak for the remainder of the year. In fact, according to IEA, oil demand will likely decline by 340,000 bpd over the year’s last three months. Besides, the agency cut its forecast for demand growth in the coming year to 1.7 million bpd.
Even with the bearish trend, the decline in the value of the US dollar boosted crude oil price on Tuesday. As is the case with other dollar-priced assets, oil tends to move inversely to the value of the greenback.
Earlier in the day, CB consumer confidence data came in lower than expected; an aspect that pushed the dollar index to its lowest level in three weeks. The released figure of 102.5 missed economists’ forecast of 106.5 and the prior month’s 107.8. As inflation takes a toll on the economy, the figures have heightened concerns over the probability of a recession. This has increased fears over crude oil demand; an aspect that has offered some short-term relief from the downtrend.