FP:Crude oil drops to 4-day low on U.S., China demand concerns
Forexpros – Crude oil futures extended sharp losses from the previous session on Monday, dropping to a four-day low as concerns over a slowdown in demand from the U.S. and China and a broadly stronger U.S. dollar dragged down prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD95.03 a barrel during European morning trade, tumbling 1.55%.
It earlier fell as much as 1.75% to trade at USD94.83 a barrel, the lowest price since June July 5.
The U.S. Department of Labor said on Friday that nonfarm payrolls rose by a disappointing 18,000 in June, significantly below expectations for an increase of 89,000, as employers hired the fewest workers in nine months. The unemployment rate rose to 9.2%, the highest level in six months.
Meanwhile, Chinese trade data released over the weekend showed that China’s imports of crude oil in June tumbled by 11.5% from a year earlier to 4.8 million barrels per day, the lowest in eight months.
A separate report said that Chinese consumer prices rose to a three-year high of 6.4% in June, adding to fears that Beijing would further tighten monetary policy to cool prices.
China is the world's second largest consumer after the U.S. and has been the engine of strengthening demand.
A stronger U.S. dollar also weighed as the euro slumped to a two-week low against the greenback ahead of a meeting of senior European Union officials to discuss the threat of the euro zone’s sovereign debt crisis spreading to Italy, the region’s third largest economy.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.7% to trade at a two-week high of 75.96.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 1.15% to trade at USD116.25 a barrel, up USD21.22 on its U.S. counterpart. The spread between the two contracts rose to record high of USD23.34 on June 15.
