Singapore: Oil prices fell on Tuesday on signs that an economic slowdown in China, the world’s second largest economy and consumer of oil, was spreading, raising concerns about future demand for fuel. Shady economic news has brought down financial markets in Asia, including crude oil futures.
International Brent oil futures were at $ 62.26 a barrel at 0736 GMT, down 48 cents, or 0.8 percent, from its previous close. Western US Intermediate West (WTI) futures UU They stood at $ 53.43 per barrel, down 0.7 percent, or 37 cents. China’s state planner warned on Tuesday that downward pressure on the economy will affect China’s labor market as falling orders from factories point to a further fall in activity in the coming months and more layoffs.
On Monday, China reported its lowest annual economic growth since 1990. China’s oil imports have so far defied the economic slowdown, reaching a record of more than 10 million barrels per day (bpd) by the end of 2018, but many Analysts believe that the country is at its peak the growth of energy, with its thirst about to decline as the slowdown decreases.
“The slowdown in manufacturing activity in China probably weighs on demand,” said Eastport, a Singapore-based tank broker, adding that industrial slowdowns tend to be important indicators that gradually fueled the lower demand for oil products sent.
In a sign of spreading economic weakness, South Korea’s export-oriented economy slowed to a low six-year growth rate of 2.7 percent in 2018, official data showed on Tuesday.
This came after the International Monetary Fund cut its global growth forecast for 2019 to 3.5 percent on Monday, down from 3.7 percent in the outlook last October. There is a high correlation between economic growth and the growth of oil demand.
“This was the second recession revision in three months, and we can still see new rebates in the near future if trade tensions increase, the UK comes out with an EU agreement or China’s economic growth falls more sharply,” he said. Hussein Sayed. , head of market strategy in FXTM futures brokerage.
Despite the darkening of the outlook, oil prices have been receiving some support from supply cuts initiated at the end of 2018 by the Organization of the Petroleum Exporting Countries (OPEC). “The effects of the OPEC-led cuts … will undoubtedly place a minimum price on crude,” Singapore-based broker Phillip Futures said on Tuesday.