Oil prices have fallen on worries China will cut demand

 
Courtney Goldsmith
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China has dropped its growth target for 2017 (Source: Getty)

Oil prices fell this morning as investors worried China will cut oil demand after it reduced its growth target for 2017 to its lowest level for more than 20 years yesterday.

Global benchmark Brent crude was down 0.98 per cent, at $55.35 per barrel, after it finished the previous session up 1.5 per cent. West Texas Intermediate (WTI) crude was down 0.96 per cent at $52.82 per barrel, after it closed 1.4 per cent higher.

"The main drag affecting markets today is the lowering of growth targets by China and tighter regulatory controls, which implies less demand for oil and commodities in general," said Jeffrey Halley, senior market strategist at Oanda.

The communist party government of the world’s second largest economy is aiming for growth of around 6.5 per cent.

China’s premier Li Keqiang described the target as "realistic and in keeping with economic principles" at the country’s National People’s Congress.

Last year, China's economy grew 6.7 per cent.

Read more: China sets lowest growth target in more than 20 years

The Chinese economy is set to overtake the US to become the world’s largest in GDP terms by 2029, according to the Centre for Economics and Business Research.

"Sentiment has been further hampered by the US dollar finding support overnight following a late Friday sell-off," said Mike van Dulken and Henry Croft, analysts at Accendo Markets.

Oil prices rose on Friday as the dollar weakened following a speech by US Federal Reserve chair Janet Yellen suggesting a rate rise in March.

Read more: Oil prices climb on the promise of further production cuts

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