Oil prices fell for a second day on Tuesday as pledges by China to transform its economy amid stuttering growth since the COVID pandemic failed to impress investors concerned about slower consumption.
Brent futures for May fell 16 cents, or 0.2%, to $82.64 a barrel by 0301 GMT, while U.S. West Texas Intermediate (WTI) fell 28 cents, or 0.4%, to $78.46. Brent was on track to fall for the fifth straight session on Tuesday.
China vowed to “transform” its economic development model and curb industrial overcapacity while setting an economic growth target for 2024 of around 5%, similar to last year’s goal and in line with analysts’ expectations.
That target, which would likely provide a boost for fuel consumption if achieved, will be harder to reach this year as China in 2023 benefited from the favourable base effect of a COVID-hit 2022, analysts said, potentially weighing on investor sentiment.
The world’s biggest crude importer also pledged to step up the exploration and development of oil and natural gas resources but at the same time vowed to tighten control over fossil fuel consumption.
While concerns over the Chinese demand outlook pressured prices lower, supply factors stemming from major producers reducing output and geopolitical worries from the Israel-Gaza war underpinned crude.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday extended their voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter to support prices amid global growth concerns and rising output outside the group.
However, U.S. crude oil inventories are expected to have increased by about 2.6 million barrels last week, according to a preliminary Reuters poll on Monday, while distillates and gasoline stockpiles were forecast lower.
“The market has been moving higher in recent weeks amid improving fundamentals. Rising spot prices indicate the physical market has begun to tighten amid a host of other supply side disruptions,” analysts at ANZ said in a note on Monday.
(Reporting by Georgina McCartney and Sudarshan Varadhan; Editing by Christian Schmollinger and Michael Perry)