The U.S. West Texas Intermediate and international benchmark Brent crude oil future were trading sharply lower on Tuesday’s trading session as a result of concerns about slowing global economic growth with lower demand.
Worries about China’s economy seem to be the main catalyst behind the weakness, and on Monday, China reported the lowest annual economic growth in nearly 30 years.
With the U.S. markets closed on Monday due to holidays, traders had almost no reaction to China’s drop in GDP, but resuming trading on Tuesday, there is now a negative reaction to comments from China’s state planner, who is warning about falling factory orders pointing to a further drop in activity for the coming months, resulting in more job losses.
It is expected to see a lower demand on Tuesday, being on a negative tone as it continues to put pressure on prices. Traders are using the news as an excuse to book profits after a nearly month-long rally.
With the current price action that has been going on for two weeks, the only way to stop the selling would be additional positive comments about U.S. and China trade negotiations.
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