Oil prices muted as China growth forecast underwhelms

© Reuters.

Investing.com– Oil prices moved little in Asian trade on Tuesday, nursing some losses from the prior session and seeing little support as top importer China presented a middling economic growth forecast for 2024.

Speculation over an Israel-Hamas ceasefire and fears of worsening demand also remained in play, largely offsetting a tighter outlook for supply.

While prices had initially taken some support from the Organization of Petroleum Exporting Countries and allies extending its current run of production cuts, this trend now appeared to have run out of steam.

Brent oil futures expiring in May steadied at $82.77 a barrel, while West Texas Intermediate crude futures fell 0.1% to $78.08 a barrel by 20:54 ET (01:54 GMT). 

China keeps 5% GDP target for 2024, outlines economic reforms

China, the world’s largest oil importer, set a gross domestic product target (GDP) of 5% for 2024, the same as the prior year. The target, along with other economic proposals, were unveiled in an official report released during the 2024 National People’s Congress.

While Beijing outlined more economic changes to help shore up growth, the government’s messaging remained largely unchanged from its prior signals, providing investors with little optimism over an immediate economic rebound in China. 

Weak private PMI data released on Tuesday further dented sentiment.

Concerns over China, coupled with uncertainty over the path of U.S. interest rates, factored into anxiety over weaker oil demand in 2024. Anticipation of hawkish signals from the U.S. Federal Reserve this week also kept markets on edge. 

Gaza ceasefire talk remains in play

Growing calls from top U.S. officials for a ceasefire between Israel and Hamas saw markets pricing in a greater chance of a de-escalation in tensions in the Middle East. 

President Joe Biden was seen pushing for an agreement to be reached by next week, for the Muslim holy month of Ramadan. 

Fears of supply disruptions stemming from geopolitical ructions in the Middle East were a key point of support for oil prices in recent months, especially as Israel and Hamas rejected several calls for a ceasefire. 

The war had also spilled over into the Red Sea, severely disrupting shipping activity in the region. 

But a ceasefire still remained elusive. Hamas had reportedly sent delegates to Cairo for negotiations, while Israel had not, recent media reports showed.