• WTI falls to the $74.00 level as lower demand from China, the world’s largest Oil consumer weighs. 
• The weakness comes despite a Libyan political faction shutting down all the country’s Oil production. 
• OPEC is expected to increase production which could bring down the equilibrium rate of WTI.  

West Texas Intermediate (WTI), the US Crude Oil benchmark, is trading down by almost one and a half percent to just above $74.00 on Wednesday. WTI is falling as concerns about Chinese demand and risks of a broader economic slowdown offset supply losses from Libya and wider geopolitical risks from the region.

A slowdown in the Chinese economy, the largest importer of Crude Oil in the world, is reducing demand whilst structural changes and the replacement of gasoline-fueled cars with electric vehicles, as well as a general shift towards a greater reliance on green energy, is further taking its toll. 

“The big surprise this year on the demand side has been the softness of Chinese demand growth. The slowdown in China demand, which is mostly structural, is an important factor in Oil markets over the next few years. Some of it is a macro story – GDP is rising at a slower pace – the other reasons are more Oil-specific and micro, and include fuel-switching to EVs and from Oil to LNG,” says Daan Struyven, Head of Research at Goldman Sachs.