Crude oil prices dipped by more than 6 percent early today, after China’s top policy-setting meeting didn’t set an annual economic growth target because of “great uncertainty” of the recovery from the coronavirus.
WTI Crude was plunging by 5.66 percent at $32, and Brent Crude was down 4.74 percent on the day to $34.35. China’s National People’s Congress (NPC), the most important policy-setting annual event in the Communist country, began on Friday and analysts were expecting to see the economic growth targets for 2020 and the stimulus to bolster the economy.
In case of stimulus for supporting infrastructure and railroads and other commodity-intensive sectors, analysts expected that government support could bolster China’s demand for crude oil, fuels, and other commodities.
By ditching the GDP growth target for this year because of high uncertainty, China roiled earlier market expectations and raised fears of slower-than-expected economic and oil demand recovery.
“The commodity market, in general, was looking for a bigger infrastructure pump from the NPC so there is bound to be an element of disappointment,” Stephen Innes, chief global market strategist at AxiCorp, said, as carried by Reuters.
In another developing story involving China, Beijing said that it plans to impose a new national security law for Hong Kong, which drew a reaction from U.S. President Donald Trump. President Trump said on Thursday that if China were to impose a new security law in the former British colony, the United States would “address that issue very strongly.”
The lack of Chinese GDP guidance and the renewed rhetoric between the U.S. and China were depressing global equity markets, the Dow futures, and oil prices early on Friday.
Despite the slump in prices early on Friday, oil was set to end a fourth consecutive week of weekly gains as global production cuts from OPEC+ and North America and slowly recovering oil demand with eased lockdowns give hope to investors and traders that the worst of the downturn may be behind us.