(Bloomberg) — Oil held steady after the biggest drop in nearly two weeks as a soft outlook for top importer China continued to batter the market.
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Brent was trading below $74 a barrel after losing more than 2% on Friday, while West Texas Intermediate was trading near $70. Data over the weekend showed Chinese consumer inflation was anemic in October, while factory prices fell again. That came after Beijing unveiled a debt swap plan on Friday to shore up the economy but failed to unleash new stimulus, disappointing investors.
Crude oil traders have been assessing the outlook for global demand heading into 2025, as well as the implications arising from the election of Donald Trump to the White House 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 OPEC’s view on Tuesday.
“The crude oil market has reached fair value and is incredibly comfortable at the $70 level,” said Chris Weston, head of research at Pepperstone Group. “Granted, we have a U.S. election risk that could impact growth expectations, but we don’t expect that fight to bite and have an impact this week.”
Timespreads show that the strength of the physical market is declining. Although Brent’s fast spread – the gap between the two nearest contracts – is still in a bullish, backward structure, the gap is narrowing. In backwardation, the price was 27 cents per barrel, compared to 44 cents a month ago.
Following the Organization of the Petroleum Exporting Countries’ outlook, the US Energy Information Administration will release its short-term view on Wednesday, followed the next day by the International Energy Agency. In its latest snapshot, OPEC lowered its demand forecasts.
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