Oil prices fall on concerns about Chinese demand

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Oil prices fell sharply on Tuesday, falling more than 5 percent on worries about the Chinese economy and extending a recent streak of wild swings to hit the market.

Benchmark Brent crude fell 5.4 percent to $76.56 a barrel after rising 10 percent in the four trading days following Iran’s October 1 missile attack on Israel.

The move was triggered by a lack of new spending commitments from Beijing after more than a week of frantic speculation that significant economic stimulus measures were on the way, raising concerns about the strength of demand in the world’s second-largest economy and forcing traders to abandon their bullish bets.

“It’s a correction of the overbought market,” said Jorge Montepeque of Onyx Capital Group. After falling below $70 a barrel in September on worries about the Chinese economy and the prospect of OPEC raising production in December, tensions in the Middle East, coupled with Beijing’s promise of stimulus, have revived market. , he said.

“Prices rose on a mix of buying from day traders, retail traders and professional traders. The latter group saw the opportunity created by too many shorts and pounced on them,” he said. But Israel has yet to strike back at Iran and, absent strong fiscal measures from China, “the market will deflate again.”

In a sign of easing tensions over a potential Israeli attack on Iran, TankerTrackers.com said it spotted three supertankers loading about 4.7 million to 4.9 million barrels of oil at Iran’s Kharg Island oil terminal. Earlier, the ships had moved away from the terminal, fearing that it could be hit by Israel.

Samer Mosis, head of fundamentals at Energy Aspects, also said traders are taking profit and added that the strengthening of Hurricane Milton in Florida could reduce gasoline demand in the state. “Given the lack of damage to refineries or upstream platforms, the hurricane will likely be a net downside for oil markets by affecting demand,” he said.

Giovanni Staunovo, an analyst at UBS, said he expects prices to stabilize around current levels until Israel’s reaction to Iran is clarified.

“I don’t see the geopolitical risk premium going away. If Israel attacks, we don’t know if Iran will counterattack, so that’s a reason to keep the risk premium in the price,” he said.