Oil prices extended losses in early Asian trading on Tuesday as investors weighed another interest rate cut in China against growing skepticism about the country’s economic prospects this year, while remaining concerned over U.S. monetary policy.
Brent oil futures fell 0.1% to $76.03 a barrel, while West Texas Intermediate crude futures fell 1.38% to $70.79 a barrel by 10.21 A.M. Bangkok time.
This week’s decline in oil prices may be traced back to growing fears regarding a Chinese economic recovery as a result of the latest LPR cut and Goldman Sachs’ recent downgrading of its expectations for Chinese growth this year.
The People’s Bank of China (PBOC) lowered two benchmark interest rates on Tuesday for the first time in ten months, following a series of similar moves last week as the country struggles to recover from the consequences of a pandemic.
Although China has been importing and refining oil at a near-record rate, markets are concerned that steady inventory builds and weak fuel demand, in particular as economic growth worsens, could significantly curb China’s demand for crude imports later the year.
The markets have also kept their eyes on Fed Chair Jerome Powell, who will give his semiannual report to Congress on Wednesday.