Oil prices fall with broader market on China’s economic concerns
(Bloomberg) --Oil resumed declines amid growing concerns over the health of China’s economy that have triggered massive losses in equities.
U.S. crude futures fell as much as 2.8% on Monday to the lowest in a week as worries mount over a possible implosion in the Chinese property sector that could impact the Asian giant’s appetite for crude. A stronger U.S. dollar is also making commodities priced in the currency less attractive.
“China is the global swing demand center,” said John Kilduff, a partner at Again Capital LLC. “If we lose China, we will lose much of the recent price gains.”
Crude prices have fared well so far this month -- U.S. oil futures are up about 4% in September -- in part due to lingering supply disruptions from storms that have swept through the U.S. Gulf of Mexico. Royal Dutch Shell Plc said a critical U.S. Gulf of Mexico oil-production platform will be out of service for the rest of this year.
While oil fundamentals are pointing to higher prices, a planned U.S. Federal Reserve meeting this week could signal the central bank is moving toward scaling back asset purchases, which may weaken global crude oil benchmarks.
Prices:
- West Texas Intermediate for October delivery dropped $1.42 to $70.55 a barrel at 12:37 p.m. in New York
- Brent for November settlement fell $1.17 to $74.17 a barrel
Investors are also continuing to monitor the energy crunch in Europe amid talk of switching from gas to oil. There are expectations diesel demand will expand in Asia during winter, while the use of oil to generate power in the U.S. may jump.
