Oil prices fall amid disappointment over Chinese stimulus and supply outlook

HOUSTON (Reuters) – Oil prices fell more than 2% on Monday after China’s latest stimulus program disappointed investors seeking demand growth in the world’s second-biggest oil consumer while supply is expected to rise in 2025.

Brent crude futures fell $1.99, or 2.69%, to $71.88 a barrel at 11:26 a.m. CST (1726 GMT), while U.S. West Texas Intermediate crude futures were at 68 .27 per barrel, down $2.11 or 3%.

Both benchmarks fell more than 2% on Friday.

Donald Trump’s US election victory could continue to impact the market, said Phil Flynn, senior analyst at Price Futures Group.

“The election, with Trump’s promise to ‘Drill Baby, Drill,’ took away some incentive for long positions,” Flynn said.

The U.S. dollar index, a measure of its value relative to a basket of foreign currencies, slightly exceeded highs set immediately after the U.S. presidential election on Nov. 5, as markets still await clarity on the future U.S -Politics wait.

A stronger dollar makes commodities denominated in the U.S. currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices.

In China, consumer prices rose at their slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus measures to shore up the faltering economy.

“Chinese inflation numbers were weak again as the market feared deflation, especially as the annual change in the producer price index fell further into negative territory… China’s economic momentum remains negative,” said Achilleas Georgolopoulos, market analyst at brokerage XM.

Bank of America Securities said in a note on Monday that non-OPEC crude oil supply is expected to rise by 1.4 million barrels per day (bpd) in 2025 and by 900,000 bpd in 2026.

“Significant non-OPEC growth next year and an underwhelming Chinese stimulus package are likely to cause inventories to rise even without OPEC increases,” Bank of America noted. “So the group faces a difficult challenge that is likely to require continued determination and potentially additional cuts if balance sheets continue to deteriorate.”

Bank of America added that supply disruptions could present opportunities for OPEC, as the Organization of the Petroleum Exporting Countries is known, and its allies to expand supply.

In late September, OPEC said it would increase supply by 180,000 bpd in December, but earlier this month member and allied countries agreed to delay the supply increase until January.

(Reporting by Erwin Seba in Houston; Additional reporting by Arunima Kumar in Bengaluru, Robert Harvey in London and Florence Tan in Singapore; Editing by Louise Heavens, Paul Simao, Susan Fenton and Christina Fincher)