Oil prices declined on Friday when China did not set an economic target for 2020 due to the COVID-19 pandemic.
The failure of China to set a growth target is leading to fears that the ongoing pandemic will have a detrimental effect on demand for oil, as China is the world’s second-largest oil consumer, reported Reuters.
On Friday at presstime, Brent July futures declined 5.77% to $33.98 per barrel, while West Texas Intermediate Crude (WTI) July futures fell 7.13% to $31.50.
China is holding a weeklong gathering of the National People’s Congress (NPC).
Stephen Innes, chief global market strategist at Axicorp, told Reuters that the commodity markets were looking for a bigger focus on infrastructure from the NPC. He said, “There is bound to be an element of disappointment.”
Innes interpreted the legislature’s inaction “as putting less focus on infrastructure investment and could be viewed as negative for oil.”
Why It Matters
China has plans to impose new national security laws on Hong Kong, a specially administered region, reported Reuters.
President Donald Trump has warned China of a strong reaction if such a law were to be imposed.
Increasing geopolitical tensions between the United States and China are also affecting the commodity markets.
Demand for gasoline is rising, and the period after the Memorial Day holiday weekend is considered to be the beginning of the U.S. summer driving season.