Commodities

Oil Sinks More amid China Concerns, Weakened Economic Perspectives By Investing.com


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By Ambar Warrick 

Investing.com– Oil prices extended recent losses on Tuesday as markets remained cautious amid signs of weakening Chinese demand, while a slew of dismal economic indicators also brewed concerns over global crude appetite. 

Crude oil prices started the week weakly after September data showed that they had fallen 2%. This was in spite of continued headwinds caused by COVID-linked restrictions. The country, which is the world’s largest crude importer, increased its oil imports as local fuel demand weakened. 

Data also showed that the economy grew faster than expected in the third quarter. But Beijing’s recent commitment to maintaining its zero-COVID policy darkened the outlook for the world’s second-largest economy. 

Weaker-than-expected business activity indicators from , the and the also pointed to slowing economic activity in the world’s largest economies, possibly indicating more headwinds for global crude appetite. 

The London-traded, an international benchmark, dropped 0.3% to $91.22 per barrel by 21:39 ET (01.39 GMT) on Monday, after falling more than 2% on Monday. The barrel price was flat at $84.56 per barrel, slightly recovering from a 0.6% drop the previous session.

Last week saw strong gains in oil prices, despite signs that supply will tighten over the next few months due to production cuts by Organization of Petroleum Exporting Countries (OPEC) and increased restrictions on Russian exports. 

A slower global economic growth may offset the price benefits from tightening supply. 

Oil prices have fallen sharply this year from their annual highs due to concerns about rising inflation and increasing interest rates, which could severely impact global demand. To lower crude oil prices, the U.S. has also pledged to release more oil from its Strategic Petroleum Reserve. 

This week’s focus will now shift to the third quarter from the U.S. due on Thursday. The figure will help gauge the full impact of rising interest rates on the world’s largest economy. 

Due to its ability to make crude imports more costly, a strengthening dollar has also had an impact on oil prices in recent weeks. 

However, Monday’s weak U.S. data raised expectations that the Federal Reserve will slow down its rate of interest rate increases to stop economic destruction. This move will likely weigh on the dollar as well as benefit crude oil prices. 

 

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