Oil Falls to Six Month Low

Oil prices fell to their lowest in nearly six months on Tuesday, as a rout in the Chinese stock market cast further doubt over the outlook for crude demand in the world’s top commodities consumer.

China’s already-volatile benchmark stock index, with a combined market capitalization of $4.6 trillion, has lost 10 percent in the last two days of trade.

Most household debt is linked to real estate rather than the stock market, but with Chinese economic growth struggling to stick at 7 percent, analysts say demand for crude may not be enough to help mop up a global supply glut.

“Typically, equity markets do have a high correlation to quarterly GDP growth,” Deutsche Bank strategist Michael Lewis said.

“Naturally, there is some risk that this could spill into the real economy. The more these things go down on a day-by-day basis, that is starting to affect the potential of Chinese demand growth being weaker.”

Brent was down 72 cents at $52.75 a barrel by 1054 GMT, having hit a session low of $52.28, its lowest since early February, bringing the losses for July to nearly 18 percent.

Brent crude is on track for its longest stretch of daily losses since March, when the price hovered just dollars away from six-year lows.

via Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.