Declining momentum in oil

Oil prices continued to slide as signs of macroeconomic weakness, particularly in top importer China, overshadowed the widely expected extension of OPEC+’s production cuts. Global benchmark Brent was trading near $83 a barrel after shedding 0.9% on Monday, while U.S. crude traded below $79. Markets remained subdued ahead of U.S. jobs data and statements from the Federal Reserve, while the negative outlook for China also casts a shadow over the outlook. Crude has advanced slowly, with Brent gaining about 7% this year, supported by tensions in the Middle East and OPEC+’s supply curbs. That optimism has been tempered by strong output from outside the cartel, a weaker demand outlook in China and waning expectations about when central banks will begin monetary easing. China set its annual growth target at around 5%, raising expectations that authorities will implement more stimulus as they seek to boost confidence in the slowing economy. The country also set a more ambitious target for economic growth or reducing energy intensity this year. Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank in Singapore, said the growth target was “a higher bar for China to lose the tailwinds of a post-pandemic recovery and a proper foundation.” Talks to end the conflict in the Israel-Hamas war are deadlocked. Meanwhile, another container ship, the MSC Sky II, was attacked by Yemen-based Houthi rebels in the Red Sea.