China’s Slide in Stock Market Brings down Crude Futures

Published By : 07 Jul 2015 | Published By : QYRESEARCH

A storm in the macroeconomic forces that brought down oil prices much lower. However, Tamar Essner, an energy analyst at NASDAQ OMX said that the slide in the China stock market started off the 10 per cent drop in crude futures this week.

Traders had more or less taken in the progress toward the debt standoff in Greece and the Iran nuclear deal program. However, an almost 30 per cent correct in Chinese stocks caught these traders by surprise, Essner said on Tuesday.

Speaking to CNBC Essner said that she didn’t think the market had completely predicted that conditions were as bad as they were in China. 

Oil supplies in the Organization of the Petroleum Exporting Countries and the United States continues to remain strong and should remain so for the next couple of years, Essner stated. However, low interest rates and a weak dollar are on the verge of reversing. 

Director of commodity research at Clipper Data, Matt Smith said that the recent developments in China have brought to the fore a disconnection between weak underlying economic data and strong gasoline demand. He added that the sudden rise in Chinese stocks has ended up making investors feeling richer. However, the stock market correction in China is poised to dampen the demand. 

Speaking to CNBC, Matt Smith said that even though compared to last year the sales of SUVs were up by 50 per cent up until May and sales of sedan rose 20 per cent, what is most likely to happen is the reversal of the growth in demand for gasoline. This in turn will only potentially worsen the excess in the market. 

Smith added that he anticipates pending reports from key oil organizations to reveal that demand has risen even as prices decline. However, production, especially in Iraq and Saudi Arabia will continue to be strong.
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