Oil prices were lower on Monday after China set a lower-than-expected target for economic growth this year at around 5 percent, and as investors cautiously awaited US Federal Reserve Chair Jerome Powell’s testimony this week.
Brent crude futures were trading down 58 cents, or 0.7 percent, at $85.25 a barrel. US West Texas Intermediate (WTI) crude futures were also down 0.7 percent, at $79.12 a barrel.
“Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a hawkish Fed hurting the US economy,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
China’s closely watched growth outlook, announced on Sunday, was lower than its 5.5 percent gross domestic product (GDP) growth target last year. GDP grew last year by just 3 percent. Policy sources had told Reuters a range as high as 6 percent could be set for 2023.
Premier Li Keqiang said on Sunday the foundation for stable growth in China needed to be consolidated, insufficient demand remained a pronounced problem, and the expectations of private investors and businesses were unstable.
However, analysts at UBS Investment Bank upgraded their forecasts for China’s GDP growth to 5.4 percent for 2023 and to 5.2 percent for 2024 from 4.9 percent and 4.8 percent respectively.
“Economic re-opening is proceeding better than we had expected earlier — the feared ‘second-wave’ of COVID did not materialize and there was little sign of supply disruptions,” Tao Wang, Head of China economic research at UBS Investment Bank, said in a note. – Reuters
