Disappointing Chinese Trade Data Lowers Current Oil Prices

The current crude oil price decreased in the wake of China’s disapponting trade data and a drop in the growth of crude demand by the IEA. In London’s mid-day trading, the per barrel crude price of Brent for September delivery lost $1.38 per barrel to $111.84.

New York’s per barrel crude price for September delivery fell $1.06 to $92.30 per barrel.

Official data showed that the imports and exports of China weakened for the second straight month in July, highlighting the worsening situation in the second largest economy of the world. The figures, which are way lower than market expectations, aggravated concerns that the economy of China is still losing strength in spite of efforts from the government to boost growth and investment to reduce the global slowdown’s effect.

According to analysts, the poor data created more force for Beijing to enact additional stimulus policies.

The exports of China grew at a minimal one percent for the month of July compared to the previous year, according to the statement of the General Administration of Customs. That growth is lower versus June’s gain of 11.3%. Imports had a year on year growth of 4.7% to $151.8 billion in the past month versus the 6.3% increase in June, showing that there is a slowdown in domestic demand. The trade surplus lowered to $25.1 billion in the past month compared to June’s $31.7 billion.

China, the largest exporter of the world, has been affected by weakness in economies overseas like debt stricken Europe, a main trading partner, where a slow property market and soft consumer expenditure have also dragged.

Elsewhere, the IEA said that weakening growth of the global economy will undercut the world’s oil demand for the current year and the next. The IEA emphasized lower demand in China and the U.S., which both account for 33% of the world market, while technical alterations in its computations also reduced its 2012 projection by 0.25 million barrels daily.

The IEA, responsible of advising developed nations regarding energy policy, lessened its economic growth projection for 2013 from 3.8 to 3.6 percent. However, its estimate for 2012 remains the same at 3.3 percent.

Recently, OPEC slightly raised its forecast in July of the world’s oil demand from 88.68 to 88.72 million barrels daily. 2013 demand was higher compared to the past month’s 89.50 to 89.52 million barrels per day, representing a rise of 0.81 million barrels per day from 2012.

The drop in the current crude oil prices happened after they recently reached their peak level in three months at London’s $113.52 per barrel due to optimistic jobs data of the United States, data from OPEC and several positive data figures from China, said traders.

New York’s crude prices also hit its highest in three months just recently, at $94.72, due to Middle East tensions, said traders. The recent official data showed that weekly jobless claims in the US dropped 361,000, another indication of moderate strength in the largest employment market in the economy in spite of low hiring in quarter two.

Markets were also happy about news that the inflation rate of China had dropped to 1.8% in the month of July since reaching its lowest in January of 2010.