Oil dropped 3.9 percent after Chinese Premier Wen Jiabao said today that the country’s 8 percent growth target for this year is within reach, indicating he doesn’t see the need to increase spending. Commodities surged yesterday on signs that Wen would announce a new program. Goldman Sachs forecast that the world economy will shrink 0.6 percent this year.
“All of the negative news about the economy is keeping the market under pressure,” said Tom Bentz, senior energy analyst at BNP Paribas in New York. “It looked like oil might break out to the upside yesterday, but in the end it failed.”
Crude oil for April delivery fell $1.77 to settle at $43.61 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices are down 2.2 percent so far this year.
At the opening of the annual session of China’s parliament, the National People’s Congress (NPC), Mr Wen said that China was facing “unprecedented difficulties”. But his speech revealed nothing of any stimulus plans beyond the 4 trillion yuan ($585 billion) in spending announced in November last year. Vain hopes for a new package had helped briefly to buoy global stockmarkets.
Chinese leaders clearly do not want to be fettered by democratic debate as they pursue their dimly outlined efforts to keep the economy growing. The NPC is a rubber-stamp affair at the best of times. But this year China has in effect dropped any pretence that it has a serious role. To save money, officials say, it has been shortened to nine days. Its schedule is as leisurely as ever. The sparse official agenda makes no mention of any special discussion of stimulus measures or of the big spending promised on health-care reform.
This report is from France24: