Oil prices fell 5% on Friday after China failed to set an economic growth target for 2020, sparking concerns that the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user.
Brent crude dropped US$1.56, or 4.3%, to US$34.50 a barrel by 0323 GMT, after gaining nearly 1% on Thursday.
West Texas Intermediate (WTI) crude declined by US$1.79, or 5.3%, to US$32.13 a barrel, having gained more than 1% in the last session.
In a week-long meeting kicked-off by China’s National People’s Congress (NPC) on Friday, the government said it omitted the 2020 target, while pledging to issue 1 trillion yuan (US$140 billion) of special treasury bonds to support companies and regions hit by the pandemic.
Abandoning the growth target “could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil,” said Stephen Innes, chief global market strategist at AxiCorp.
“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,” he said.
Despite the decision by China, both Brent and WTI are heading for a fourth week of gains as more evidence emerged that fuel demand is recovering as countries ease business and social restrictions imposed to counter the coronavirus pandemic. While traffic flows in Berlin and Tokyo have rebounded, easing of restrictions in the United States has supported demand for gasoline.