Oil prices tumbled on Monday as part of a broader selloff across commodities and equities markets, briefly plunging to multi-month lows before bouncing in afternoon trade.
NYMEX May crude closed $2.58/b lower at $88.71/b, after bouncing off of its lowest level since mid-December at $87.86/b during late-morning trade. The front-month contract dropped more than $1.50/b between the 9:00 a.m. EDT (1300 GMT) NYMEX market open and 11:00 a.m. EDT (1500 GMT).
ICE May Brent, which expired at the close of US trade on Monday, settled $2.72/b lower at $100.39/b, after dropping as low as $100.02/b during the morning session. The June contract settled down $2.41/b at $100.63/b, after dropping to $99.95/b at the height of the selloff.
Analysts said that weaker-than-expected Chinese GDP and manufacturing data released overnight sent commodities markets, including oil, tumbling amid fresh concerns about global demand growth. The National Bureau of Statistics of China released a year-on-year GDP reading 7.7%, below expectations of 8.0%.
“The petroleum markets are extending last week’s losses as part of a wider wave of selling across a broad range of commodities after China reported weaker GDP growth for the first quarter than expected,” Citi Futures Perspective analyst Tim Evans said in a note.
Gold, in particular, plunged further on Monday, hitting its lowest level in two years, according to a report by AFP. Silver also declined sharply, with analysts pointing out that the disappointing Chinese data could prove particularly bearish for industrial metals.
“Silver has gotten the larger embrace because of its supposed use in industrial production, so the China slowdown hits it harder,” John Kilduff, of Again Capital, said in a note.
“Commodity markets and traders are really kind of worried that China isn’t going to catch US growth,” Bill O’Grady, chief market strategist at Confluence Investment Management, said, adding that there the move from an export-led to domestic-demand growth could prove to be difficult. “It’s difficult to do in the best of environments.”
NYMEX May RBOB closed down 4.42 cents at $2.7576/gal, while NYMEX May heating oil settled 4.26 cents lower at $2.8292/gal.
Since the start of the month, the NYMEX May crude contract has shed $8.52/b or 8.76%, while ICE May crude has shed $9.63/b or 8.75%.
Analysts said that the broader plunge in oil prices is evidence that market players are looking away from inflation-hedge commodity assets toward higher dividend products like equities markets.
Equities markets fell back sharply during US trade after a downturn in global markets overnight. At the 2:30 p.m. EDT (1830 GMT) NYMEX market settle, the S&P was down 1.68% at 1,562.19, while the Dow Jones Industrial Average was 1.29% lower at 14,673.0.
Source: platts.com
