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Oil prices fall further on prospects of Chinese slowdown

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(Globalpost/GlobalPost)

World oil prices fell further on Thursday on mounting concerns about an economic slowdown in China, with the strong US dollar also putting pressure on prices, analysts said.

Brent North Sea crude for delivery in September fell 44 cents to stand at $106.75 a barrel in midday deals in London.

New York's main contract, West Texas Intermediate (WTI) for September, slid 15 cents to $107.08 a barrel.

"China has been and remains the key driver of global oil demand, the dynamism of which has this year been lagging considerably behind the expansion of supply," said Commerzbank analysts in a research note to clients.

"Weaker demand from China would thus cause the oversupply to increase even further."

They added: "Financial investors clearly see this as an opportunity to grab profits, so the oil price is likely to remain under pressure for the time being."

New York crude had already dived by almost $2 on Wednesday after HSBC's preliminary purchasing managers index of Chinese manufacturing activity hit an 11-month low, signalling weaker demand in the world's top energy consuming nation.

"We are seeing a continuation of last night's pullback in crude prices over the weak Chinese data," Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.

The sluggish reading in China overshadowed upbeat economic data in the eurozone, where private business activity returned to growth in July for the first time for 18 months.

Adding to the selling pressure was a pickup in the dollar, which makes oil more expensive for buyers using weaker currencies, denting demand.

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http://www.globalpost.com/dispatch/news/afp/130725/oil-prices-fall-further-prospects-chinese-slowdown