Oil is falling on concerns about US demand, despite Chinese stimulus

Global oil prices fell on Wednesday after rising in early Asian trade, as markets balanced concerns about demand in the United States, China’s pledge to support economic growth, falling Russian supplies and falling US inventories.

Brent crude futures fell 22 cents to $79.41 a barrel by 0403 GMT, and US West Texas Intermediate crude fell 32 cents to $75.43 a barrel.

Leon Lee, market analyst at CMC, said, “There are a lot of positive factors for oil prices from the point of view of supply and demand at the present time, and while we expect WTI to recover close to $80 a barrel, this does not mean that the market is speculating to the upside because the position Global central banks’ reluctance to tighten continues to represent a decline in risk appetite.”

“With expectations that the US central bank will raise interest rates for the last time in July, concerns about demand in the United States that limit oil price gains will likely continue,” he added.

Economists remain concerned that US inflation will not fall fast enough even with interest rates raised. A Reuters poll showed that core inflation, which excludes food and energy prices, will decline slightly by the end of the year or remain near its current level of just under five percent.

China’s National Development and Reform Planning Commission on Tuesday pledged to implement policies to “strengthen and expand” consumption in the world’s second-largest economy as consumers’ purchasing power continues to weaken.