Oil prices declined again today over concerns about China’s economic slowdown and decades of high oil production in the US; however, a further fall was restricted due to a weak US dollar and supply disruptions in the Middle East and Africa.
Brent crude slipped by 50 cents to $107.15 a barrel, while US crude fell by 75 cents at $104.74 a barrel, reported Reuters.
Preliminary data from HSBC showed that manufacturing activity in China hit an 11-month low in July and its job market had weakened too, leading to apprehensions of slower demand growth in the world’s second biggest oil consumer.
On Wednesday, the US Energy Information Administration (EIA) released its data which revealed US crude output had reached its highest since 1990, while weekly crude inventories dropped slightly in the week to 19 July over previous weeks.
The US Federal Reserve’s policy meeting, scheduled to take place next week, is expected to provide some indication on when the US will begin rolling back its monthly bond purchases.
Oil prices received some support from supply disruptions in the North Sea, Middle East and Africa, along with the weak US currency.
The dollar hit a one-month low against other major currencies, which encouraged holders of other currencies to purchase dollar-denominated commodities such as oil, thereby influencing markets.
Prices were impacted by various global developments such as an announcement by Iraq that crude exports will be reduced by between 400,000 and 500,000 barrels per day (bpd) in September due to repairs at ports, and the blow up of Yemen’s key export pipeline by tribesmen.
Meanwhile, the North Sea’s Forties pipeline has reduced pumping rates by about 40,000 bpd due to maintenance work.
Image: Concerns about slow economic recovery in China has impacted oil prices. Photo courtesy of freedigitalphotos.