Oil drops 2% on worries about China’s economy

Brent crude futures fell $1.60 to $84.61, while US West Texas Intermediate crude fell $1.83 to $80.68

NEW YORK:

Oil prices fell about 2% on Tuesday on sluggish Chinese economic data coupled with fears that Beijing’s unexpected cut in key policy rates was not sufficiently substantial to rejuvenate the country’s sputtering post-pandemic recovery.

Brent crude futures fell $1.60, or 1.9%, to $84.61 a barrel by 1733 GMT, while US West Texas Intermediate crude fell $1.83, or 2.2%, to $80.68.

Supply cuts by Saudi Arabia and Russia, part of the OPEC+ group comprising the Organisation of the Petroleum Exporting Countries (OPEC) and allies, have helped to galvanise a rally in prices over the past seven weeks.

However, China’s industrial output and retail sales data on Tuesday showed the economy slowed further last month, intensifying pressure on already faltering growth and prompting authorities to cut key policy rates to bolster economic activity.

When the oil market appears to be comfortable, it is often the case that China is the number one fire douser, throwing a wet blanket over those dreaming of prices north of $90, said John Evans of oil broker PVM. China is the world’s biggest oil importer.

Published in The Express Tribune, August 16^th, 2023.

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