Oil prices drop on China demand worries
Oil prices fell in Asian trading hours on Monday as analysts expected weaker demand from China in upcoming months.
Benchmark U.S. crude futures CLc1 had dropped 24 cents from their last settlement to $46.36 per barrel by 0232 GMT. Internationally traded Brent futures LCOc1 were at $49.48 a barrel, down 8 cents.
Monday’s falls came after gains made last week following a further decline in the U.S. oil rig count which indicated that domestic crude production could drop in coming months.
But in Asia, the possibility of slowing demand in China dominated trade on Monday, with growth faltering in the world’s No.2 economy.
While China has so far avoided a hard landing, activity in China’s manufacturing sector contracted in October for a third straight month, an official survey showed on Sunday, fuelling fears the economy may still be losing momentum in the fourth quarter despite a raft of stimulus measures.
“Weak economic data out of China will likely keep any gains in commodity prices limited,” ANZ said.
Barclays said that China’s oil demand growth for September, adjusted for inventories, slowed to 226,500 barrels per day (bpd), or 2.1 percent, compared with the same month last year, much lower than the 6.3-percent gain registered for the first three quarters of the year.
“The strong demand data in the first eight months was inconsistent with the observed slowing macroeconomic activity, while the weak number in September better reflected real demand,” the bank said.
“Fundamentals suggest moderate demand ahead, in our view,” it added.
Leading economic indicators in other Asian economies were mixed, with South Korea and Taiwan figures pointing to further slowdown, while data from Japan and Vietnam improved.
Source: Reuters – Oil prices drop on China demand worries
