WTI crude oil prices dropped below $68 per barrel, pressured by renewed strength in the U.S. Dollar and disappointment over limited economic stimulus in China. The oil market faced a setback after China, the world’s largest oil importer, unveiled measures that fell short of boosting confidence in its economic recovery, stirring doubts over future demand.
China’s latest move aimed to revive its post-pandemic economy, but traders were left disappointed as the measures lacked the expected impact. Many had hoped for more aggressive action from Beijing to revitalize consumption and industrial activity, factors crucial to energy demand. Instead, the restrained policies have left concerns about China’s growth trajectory largely unresolved.
Meanwhile, the dollar index gained strength as investors focused on the U.S. Federal Reserve’s hawkish tone and a favorable economic outlook. A stronger dollar typically weighs on oil prices, making it more expensive for holders of other currencies. The combination of a firmer dollar and subdued Chinese stimulus efforts pushed WTI crude lower, reinforcing a bearish sentiment in the market.
Analysts now question the near-term outlook for oil, with WTI potentially facing further declines if demand from key markets like China does not rebound. The currency dynamics and the response of major economies to sluggish demand could continue to shape oil prices in the coming weeks.
