Oil prices extend fall on China, global demand concerns

REUTERS

SINGAPORE (Reuters) – Oil prices fell on Tuesday, after heavy losses in the previous session, as two days of weak Chinese data added to worries about the top crude oil importer’s energy demand growth.

Brent crude LCOc1 fell 42 cents, or 0.71%, to $58.93 a barrel by 0720 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 dropped 44 cents, or 0.82%, to $53.15.

China has been hit by poor economic data for two straight days. The National Bureau of Statistics (NBS) reported on Tuesday that China’s factory gate prices declined at the fastest pace in more than three years in September.

That followed customs data on Monday that showed Chinese imports had contracted for a fifth straight month.

The U.S.-China trade dispute also continued to cast a shadow on the global economy, despite claims of progress toward a deal, leaving unanswered questions over future oil demand.

Taken all together that was enough to outweigh any support oil prices might have received from worries about possible escalation of geopolitical tensions in the Middle East.

“Demand-side concerns emerging from the Sino-U.S. trade war have continued to weigh on oil prices,” said Abhishek Kumar, head of analytics at Interfax Energy in London.

“China’s weak economic data is a manifestation of the trade dispute,” he said.

On Monday U.S. President Trump imposed sanctions on Turkey and demanded the NATO ally stop a military incursion in northeast Syria that is rapidly reshaping the battlefield of the world’s deadliest ongoing war.

Prices could also get a boost this week as investors are expecting a drawdown in crude inventories in the United States.

“This week … markets are expecting to see a draw (on) U.S. stockpiles and possibly further escalations in the Middle East,” said Edward Moya, senior market analyst at OANDA.

The next weekly U.S. oil inventory reports are due out from industry group the American Petroleum Institute and the U.S. Energy Information Administration on Oct. 16.

Reporting by Seng Li Peng; Editing by Tom Hogue