(Bloomberg) — Oil extended its biggest drop in almost two weeks as a soft outlook in top importer China continued to plague the market.
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Brent traded near $73 a barrel after losing more than 2% on Friday, while West Texas Intermediate fell below $70. Data on the weekend showed anemic Chinese consumer inflation in October, while factory-gate prices fell again. The dollar climbed further, making commodities priced in the currency less appealing, following President Trump’s re-election last week.
The retreat in crude prices has come alongside weakness in key market indicators. The nearest futures contract is trading at its lowest premiums since June relative to those a few months ahead, indicating that short-term tightness in the market is easing.
Crude traders have been assessing the outlook for global demand heading into 2025, as well as the implications stemming from Donald Trump’s election to the White House, including a surging dollar, and tensions between Israel and Iran. With a surplus widely expected next year, investors will get a slew of influential outlooks this week, starting with the view from OPEC on Tuesday.
“A resumption of the dollar rally, which temporarily paused on Friday, is leading to negative sentiment across commodities this morning,” said Ole Hansen, head of commodities strategy at Saxo Bank. “The market’s belief in price supportive initiatives in China has deflated,” he added.
After the outlook from the Organization of the Petroleum Exporting Countries, the US Energy Information Administration will issue its short-term view on Wednesday, followed by the International Energy Agency the next day. In its last snapshot, OPEC downgraded its demand forecasts.
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