Choose country & language:

Oil prices drop on Chinese demand data

Home >  Daily Market Digest >  Oil prices drop on Chinese demand data

Written by:
Myrsini Giannouli

25 October 2022
Share the article

Oil prices dropped on Monday, with WTI price falling below the $84 per barrel level before paring some of the day’s losses. If the WTI price declines, it may encounter support near $82.1 per barrel, while resistance can be found at the $93.4 per barrel level.

Lower-than-expected data for Chinese oil demand put pressure on oil prices on Monday. Although demand increased in September compared to August, Chinese crude oil import data is approximately 2% lower than last year. China is the world’s largest energy importer and concerns about renewed lockdowns are stifling oil demand. China’s zero-Covid policy has isolated the country and has dealt a heavy blow to its economy.

Global recession fears are also pushing oil prices down. Economic activity data on Monday fuelled global recession concerns, pushing oil prices down. Services and Manufacturing PMI data were lower than expected across the board, indicating economic contraction in Europe, the US, and the UK.

Increasingly hawkish Fed rhetoric has promoted a risk aversion sentiment boosting the dollar and putting pressure on oil prices. Aggressive rate hikes stifle economic activity, undercutting oil demand. Fed rhetoric remained hawkish last week, boosting the odds of a sharp rate hike at the Fed’s next monetary policy meeting in November. A 75-bps rate hike is expected in November and has already been largely priced in by markets. Sharp rate hikes and continuous fiscal tightening run the risk of tipping some of the world’s leading economies into recession though.

The Biden administration announced the release more of barrels from the US Strategic Petroleum Reserves last week, checking the ascend of oil prices. Oil prices remain high ahead of the US midterm elections, causing a headache for the US government. US President Joe Biden announced a plan to sell 15 million barrels from the SPR representing the latest tranche of the 180-million-barrel program.

OPEC+ recently decided on a massive output cut of 2 million BPD starting in November. OPEC performed the largest reduction since 2020 in a bid to raise prices, led by Saudi Arabia and Russia. OPEC+ members strive to reclaim the $100 per barrel key level despite mounting global recession risks. The US and the EU have been striving to convince the Saudis to increase oil output and provide some relief to the energy crisis and also to deprive Russia of its huge earnings from oil exports. OPEC however seems to have turned its back on the West.

WTI 1hr chart


The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article:

Latest news

Dollar tumbles as markets anticipate Fed pivot

Myrsini Giannouli 29 November 2023

Gold prices surge as US yields decline

Myrsini Giannouli 29 November 2023

Oil prices rally on anticipated supply cuts

Myrsini Giannouli 29 November 2023

Bitcoin rises above key $38,000 level

Myrsini Giannouli 29 November 2023
Why TopFX
13+ years

industry presence
as a Liquidity Provider

from 0.0 pips

and reliable execution


client funds


customer support

Open your Live Account in 3 Steps
Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!