The Magazine for Asian Investors
Crude oil futures ended Wednesday’s (Aug. 31) trading session below $90 as investors worried about a slowdown in the Chinese economy. Several major Chinese cities were reported to have tightened their measures to control COVID-19, including reports that China’s manufacturing sector contracted for the second month in a row.
- WTI crude futures fell $2.09, or 2.3%, at $89.55 a barrel.
- BRENT crude futures fell $2.82, or 2.8%, at $96.49 a barrel.
In August, WTI crude oil futures fell by 9.2% and Brent crude oil futures by 12.3%.
Investors are concerned that the global economic slowdown will also weaken oil demand. China, the world’s second largest economy, reported that its manufacturing Purchasing Managers’ Index (PMI) was 49.4 in August, although up from 49 in July, the PMI was below 50 for the second month in a row.
This suggests that China’s manufacturing sector is still contracting due to the impact of COVID-19, the energy crisis and the collapse of the property market.
In addition, it was reported that the city of Guangzhou announced stricter measures to control COVID-19 yesterday and that parts of Shenzhen, China’s technology hub, and Dalian remain under lockdown.
These concerns have overshadowed the positive EIA report that U.S. crude oil inventories fell by 3.3 million barrels last week.
Crude oil inventories at Cushing, Oklahoma, the delivery point for U.S. crude oil futures, fell by 500,000 barrels and gasoline inventories fell by 1.2 million barrels.
Investors are waiting for the OPEC and OPEC+ meeting on September 5 and expect OPEC+ to announce production cuts at that meeting to support market prices.
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