Oil prices dip as China stimulus underwhelms, US hurricane risk abates

Investing.com– Oil prices fell in Asian trade on Monday (NASDAQ:MNDY) as more fiscal stimulus measures from top importer China largely underwhelmed, while a hurricane in the Gulf of Mexico appeared to have a limited impact on U.S. production.

Prices extended losses from Friday after Beijing approved about 12 trillion yuan ($1.6 trillion) in fresh fiscal spending. But a lack of targeted measures for private consumption largely left investors wanting more, especially as data over the weekend showed persistent Chinese deflation.

In the U.S., fears of immediate disruptions in production eased as Hurricane Rafael weakened into a tropical storm as it made landfall in Cuba. But several energy firms in the Gulf of Mexico still kept production offline.

Brent oil futures expiring in January fell 0.2% to $73.72 a barrel, while West Texas Intermediate crude futures fell 0.3% to $69.90 a barrel by 20:38 ET (01:38 GMT). 

China stimulus underwhelms 

China’s new stimulus measures disappointed investors hoping for more, especially as the world’s biggest oil importer did not announce measures specifically aimed at improving private spending. 

Analysts at ANZ said the gaps in stimulus were to accommodate for potential headwinds from a change in U.S. administration, after Donald Trump won the 2024 presidential elections.

Trump has vowed to impose steep import tariffs against China, heralding more economic headwinds for the country. 

Data released over the weekend also showed Chinese consumer inflation contracted in October, while producer inflation shrank for a 25th consecutive month.

ANZ analysts said they were now awaiting China’s Politburo meeting and the Central Economic Work Conference in December for more cues on stimulus. 

US supply fears abate as Hurricane Rafael weakens 

Hurricane Rafael weakened into a tropical storm over the Gulf of Mexico, and is expected to weaken further in the coming days.

The storm is now projected to pose a limited threat to oil production in the region, heralding fewer supply disruptions.

In the U.S., markets were uncertain over the outlook for production, which is expected to potentially increase under Trump.

But Trump is also expected to impose harsher sanctions against Venezuela and Iran, potentially cutting off some global oil supply.