After a week-long rally, oil prices fell more than 5% during Tuesday’s trading, representing the biggest daily decline since early September, if they close at the current price of $76.8 for Brent futures for December delivery, and $73.11 for West Texas Intermediate crude for November delivery.
The drop came as traders monitored tensions in the Middle East, and the possibility of pumping more stimulus into the arteries of the Chinese economy after the country returned from a week-long holiday, while the Development and Reform Commission’s briefing today did not provide the new measures and incentives the market was looking for for the world’s second-largest economy.
Thierry Wezeman, global foreign exchange and interest rate strategist at Macquarie, believes that if oil prices close at this level of decline today, it will be China, not the Middle East, because of it. He considered that “the disappointment for traders who expect to see new fiscal spending in China is what lowered most commodity prices today.”
However, traders are concerned about developments in the Middle East, after Iran's missile attacks on Israel raised fears of a full-scale war in a region that accounts for a third of the world's oil supplies, amid US President Joe Biden's efforts to dissuade Tel Aviv from attacking Tehran's oil fields.
