On Tuesday, oil markets were also pressured after the plunge in Chinese equities. The perceived weakness in the Chinese economy, the second largest in the world, sent shock waves through the commodities market.
“Data on the demand side out of China, such as crude oil imports, has been weak lately and has contributed to oversupply fears,” Carsten Menke, commodities analyst at Julius Baer, said in the FT article. “Taken together with falling metal prices, commodity markets are signalling broad-based concerns about Chinese demand and the government’s ability to stimulate growth.”
Moreover, hedge funds have cut long positions by about a third to less than 200 million barrels from about 289 million barrels of oil during the run-up to the May highs.
United States Oil Fund
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Max Chen contributed to this article.