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Oil futures fell Tuesday, extending a slide for crude tied to worries over the global economic outlook after weak economic data out of China on Monday.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
+0.85% CLU22,
+0.85%
fell 55 cents, or 0.6%, to $88.86 a barrel on the New York Mercantile Exchange. -
October Brent crude
BRN00,
+0.46% BRNV22,
+0.46% ,
the global benchmark, was down 64 cents, or 0.7%, at $94.46 a barrel on ICE Futures Europe. -
Back on Nymex, September gasoline
RBU22,
+0.12%
fell 0.5% to $2.938 a gallon, while September heating oil
HOU22,
+1.57%
was up 1% at $3.473 a gallon. -
September natural-gas futures
NGU22,
+3.17%
rose 3.4% to $9.024 per million British thermal units.
Market drivers
Crude prices slid on Tuesday after weak economic data from China raised fears that a slowing global economy will reduce demand for energy products. Industrial production and retail sales came in lower than the previous month and shy of analysts’ forecasts, while the People’s Bank of China delivered a surprise interest rate cut.
“The unexpected move gave the impression that it is alarmed about the extent of economic weakening,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note. “In our view, problems in the real-estate sector, plus the government’s zero-COVID strategy, are likely to continue to weigh on the economy in the short to medium term, meaning that oil prices will probably face persistent headwind from this side.”
Investors were also tracking developments around efforts to revive Iran’s nuclear accord. Tehran responded to a draft agreement presented by the European Union, indicating it had reservations and signaling talks were likely to extend beyond what had been described as a Monday deadline, Politico reported.
See: Iran nuclear deal: What’s at stake for oil prices as Tehran prepares response to EU proposal
“However, even if a new agreement were to be signed, it would presumably take some time before sanctions could be fully lifted. When the 2015 agreement was reached, it took roughly half a year for this to happen. Iran’s oil production then increased by around 700,000 barrels per day in the first half of 2016,” Fritsch wrote.
Hear from top Wall Street energy analysts at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. RBC’s Helima Croft will be there.
