Oil Prices Tumble On Weak Chinese Economic Data

A previously upbeat outlook for the commodity is now overshadowed by concerns over rising COVID-19 cases and slowing economic growth in China since economies reopened.

The price of oil is over 7% lower in August after four consecutive months of gains.

The outlook for oil is also impacted by recent data from China. China’s economic recovery has slowed, according to its macroeconomic data. A surprise slowdown in Chinese exports in July and a slowdown in factory orders in July were also indicators of the slowing economy.

While an increase in the state of emergency restrictions to deal with record cases of infections weighs on household expenses in Japan, the world’s fourth-largest importer of crude oil, many analysts expect modest economic growth in Q3

Continuing losses for Brent crude futures could likely accelerate if $68.5 support breaks, with subsequent support at $65 a barrel.

The rise of COVID-19 cases is once again causing oil markets to tremble. Two of the world’s biggest oil consumers, the US and China, are experiencing unprecedented increases in cases of COVID-19.

According to its COVID Zero policy, China has imposed strict measures including travel restrictions in 46 cities and lockdown restrictions.

The oil demand outlook in Australia and Japan is also being hit by lockdowns, which are having a negative effect on oil prices. As OPEC has agreed to increase output levels, some parts of the world are re-imposing pandemic lockdown restrictions at the same time.

The imminent start of the Fed’s tapering on balance sheet purchases could trigger a substantial correction in the markets, which would end the bullish phase in the markets.