After increasing to a five-week high, oil prices slipped following a report that showed weak trade data from China. The relationship between the Chinese economy and oil prices is one investors who participate in crude oil trade should pay close attention to, as the Asian nation surpassed the U.S. as the world’s biggest energy consumer in 2013, according to The Wall Street Journal.
This relationship can help oil traders predict market volatility, as a poor economy could reduce Chinese demand for oil. As a result, the price of oil may fall, as demand is down from the world’s largest energy consumer.
The fear is that these latest trade numbers from China signal a gradual slowdown in the country’s economy. According to ABC News, Chinese imports of crude oil were at the lowest in five months at 5.54 million barrels in March. This is related to the struggle that leaders have had reaching the target of 7.5 percent economic growth this year.
However, oil prices aren’t falling too much on the new Chinese data, as concerns over tension in Russia and Libya has created uncertainty for some of the world’s supply, according to Reuters.
“The market was knocked last night by the Chinese import export data – it was a bearish double whammy,” Matt Smith, analyst at Schneider Electric in Louisville, Kentucky, told Reuters. “But we’re loath to move lower given the dual concern of Moscow and Libya, where there is uncertainty as to when control of those ports will transfer power.”
Moving forward, oil traders should keep an eye on the Chinese economy as any further slowdown could have a much bigger impact on the crude market.
The post Oil Prices Decline on Weak Chinese Trade Data appeared first on | HY Markets Official blog.
Article provided by HY Markets Forex Blog
