Oil prices fall as traders fear Chinese economic slowdown
Summary
- U.S. crude prices fell to around their lowest levels since late May and about 12% below last month’s multiyear high
Oil prices fell on Monday, extending a recent stretch of turbulent trading after data showing that China’s economic recovery slowed more than anticipated last month.
U.S. crude prices slid 2.9% to $66.43 a barrel, dropping to around their lowest levels since late May and about 12% below last month’s multiyear high. Prices have retreated as cases of the Delta variant of the coronavirus surge around the world, fueling fears that a new wave of travel restrictions will soften demand for fuel.
The spread of the Delta variant and extreme weather contributed to a larger-than-expected slowdown in China’s economy in July, figures released Monday showed. Indicators of industrial, consumption and investment activity all showed growth retreating faster than expected and decelerating from June’s yearly growth rates.
The data are a concern for commodity traders because China is the world’s largest importer of oil and a huge consumer of other raw materials such as copper. Weakness in China’s economy can quickly spread around the world, analysts say, particularly when travel patterns and supply chains are being disrupted as they are now due to the coronavirus.
“Concerns about the spread of the Delta variant in China, and the effects this will have on oil demand, are continuing to weigh on prices," Commerzbank analysts said in a note.
Brent crude, the global gauge of oil prices, were down 2.5% at $68.84 a barrel on Monday.
A delay in return-to-office plans for many large U.S. companies has compounded worries about softer travel patterns and commodity demand, analysts say. Many investors are fearful that some of the stay-at-home trends that sunk prices last spring could take hold once again.
In another sign of mounting concerns about the world economy, most actively traded copper futures slid 1.1% to $4.34 a pound. The industrial metal that is used to build everything from apartment buildings to electric vehicles is well below its record from earlier this year.
A stronger dollar also was hurting commodities including oil and copper that are sold in the U.S. currency by making them more expensive for overseas buyers.
Despite recent volatility, some analysts remain confident that curtailed supply will buoy commodity prices moving forward. Many companies that produce raw materials are under pressure from shareholders to limit new production and emissions, fueling some wagers on long-term supply shortages.
This story has been published from a wire agency feed without modifications to the text
