Investing.com — Oil prices fell sharply Tuesday, hitting over 2-month lows as disappointing trade data from China raised fresh concerns about the economic health of the world’s largest crude importer.
By 09:45 ET (14.45 GMT), the futures traded 2.6% lower at $78.70 a barrel, while the contract dropped 2.6% to $82.94 a barrel. Both hit their lowest levels since late August.
Weak Chinese exports disappoint
Data released on Tuesday showed that China’s shrank more than expected in October, while the country’s was at its worst level in 17 months.
unexpectedly grew during the month, highlighting some improvement in local demand as Beijing rolled out more stimulus measures, but the prolonged weakness in exports could stymie growth in the country and dent oil demand.
Also weighing on market sentiment was weak economic readings from the eurozone and U.K., which raised concerns that slowing economic growth will weigh on oil demand in this important energy consuming region.
Dollar rebound weighs on crude market
The dollar rose from a six-week low as Minneapolis Fed President warned that the central bank may not be done raising interest rates.
Kashkari’s comments somewhat dented expectations that the Fed was done raising interest rates, spurring a rebound in the dollar, which in turn weighed on oil prices.
Net long positions sharply reduced
The crude market had recorded steep losses last week, as traders had begun to factor in growing bets that the Israel-Hamas war will not disrupt supplies in this oil-rich region.
The latest positioning data shows that money managers reduced their net long positions in both the NYMEX WTI and ICE Brent contracts, “driven by fresh shorts entering the market, whilst there was obviously a fair amount of long liquidation,” said analysts at ING, in a note, resulting in “smallest net long speculators have held in WTI since July.”
Crude demand to rebound – OPEC head
Crude prices had risen slightly from multi-month lows on Monday, after major suppliers Saudi Arabia and Russia confirmed that they will maintain their ongoing supply reductions until the end of the year, heralding tighter oil markets.
Additionally, the global economy is set to grow and drive fuel demand, despite macro challenges, said Haitham Al Ghais, the secretary general of the Organization of Petroleum Exporting Countries.
“When we talk about demand and our outlook, maybe for the short term to medium term, we still see a healthy global economy growing despite all the challenges and pressures,” he said.
(Ambar Warrick contributed to this article.)
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