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Brent crude futures down $1.26, WTI crude falls $1.20 as China’s deflationary pressures grow.

Oil prices dropped by more than $1 per barrel, falling over 1.5% in early Monday trading, as weak inflation data from China and uncertainty surrounding Beijing’s economic stimulus plans raised concerns about demand.

Brent crude futures declined by $1.26, or 1.59%, to $77.78 per barrel by 0020 GMT, while U.S. West Texas Intermediate crude futures fell by $1.20, or 1.59%, to $74.36 per barrel.

The negative economic indicators from China overshadowed market concerns about potential disruptions in oil production following Israel’s possible response to Iran’s October 1 missile attack. However, the U.S. has urged Israel to avoid targeting Iran’s energy infrastructure.

Official data released on Saturday revealed that China’s deflationary pressures worsened in September. A press conference that same day left investors uncertain about the scope of Beijing’s anticipated stimulus measures aimed at reviving its struggling economy.

China’s consumer price index rose by only 0.4%, falling short of expectations, while the producer price index saw its steepest decline in six months, dropping 2.8% year-on-year, according to the National Bureau of Statistics.

“Saturday’s briefing from China’s Ministry of Finance turned out to be a disappointment. The fiscal measures needed to eliminate downside risks to growth and revive consumer confidence are notably missing,” said Tony Sycamore, an IG market analyst, in a note.

Beijing announced plans on Saturday to increase debt issuance but did not specify an exact amount.

Both oil benchmarks had gained 1% by the end of last week, driven by concerns over potential supply disruptions in the Middle East and the impact of Hurricane Milton on fuel demand in Florida.

On Friday, the U.S. expanded sanctions against Iran in response to its October 1 attack on Israel, targeting Iran’s “ghost fleet” involved in the illegal transportation of oil worldwide.

In the U.S. market, energy companies added oil and natural gas rigs last week for the first time in four weeks, according to a closely watched report from energy services firm Baker Hughes.

The oil and gas rig count, which is an early indicator of future production, increased by one to a total of 586 for the week ending October 11.

While Hurricane Milton temporarily boosted gasoline demand due to evacuations, weak overall demand remains the primary focus for market fundamentals.

Meanwhile, oil giant BP reported a $600 million decline in third-quarter profit on Friday, citing weak refining margins and a slowdown in global oil consumption.

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