A set of weak economic data and unexpected interest rate cuts in China led to a sharp sell-off, driven by concerns over sluggish demand in the world’s biggest oil importer.
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Price of West Texas Intermediate crude oil
As of 12 p.m. Eastern time
By The New York Times
Oil prices fell to their lowest level in months on Monday, after signs emerged that China’s economy is faltering.
The price of West Texas Intermediate crude oil, the U.S. benchmark, dipped below $90 per barrel in afternoon trading, down more than 3 percent, its lowest level since February. The price of Brent crude, the international benchmark, fell by a similar amount, to below $95 a barrel, the lowest since March.
China’s economy, which has shown signs of a slowdown for months, sputtered even more in July according to data from the country’s National Bureau of Statistics. Retail sales and industrial production in the month were weaker than expected, according to data released on Monday. The country’s central bank also unexpectedly reduced interest rates by a tenth of a percentage point to help bolster the economy, another signal of tumult.
China’s strict pandemic restrictions have led to refinery shutdowns and hurt the country’s economy and trading partners that are reliant on China for its factories and consumers. Slowing economic growth in China is putting stress on the United States, which is grappling with the possibility of a recession, and European economies upended by Russia’s invasion of Ukraine.
Saudi Aramco, which reported a 90 percent jump in profit in its latest quarter, said on Sunday it would increase its crude oil output if the Saudi Arabian government asked, potentially easing supply constraints and putting more pressure on prices.
More than half of the cost of gasoline is dictated by oil prices. The recent decline in oil prices pushed the average price of gasoline in the United States to $3.965 a gallon on Monday, the 62nd consecutive day of declines.