“China’s drop pushed everything lower and now we’ll see if the bounce by US stocks after the early pull back can stop the slide” said Phil Flynn analyst at Price Futures Group in Chicago. The Bloomberg Commodity Index of 22 raw materials sank Monday to the lowest since 1999 on concerns that China’s demand will slow.
Opec producers, notably Saudi Arabia, and Iraq were producing more oil than necessary, while US stockpiles were almost 100 million barrels above the five-year seasonal average. “The supply-demand situation still points to a surplus of oil in the market“.
US light crude was down $1.83, or 4.5 percent, at $38.62 a barrel, after falling as low as $38.59. Oil hadn’t closed below $40 since February 2009, although it briefly traded below that level on Friday.
U.S. gasoline futures, kept a lid on crude’s recovery, tumbling almost 2 percent to seven-month lows due to the restart of a key Midwest refinery unit and the approaching end of the summer driving season.
Yet following the spike in their value, open interest in their trading started to fall late last week, and while some traders said this could imply that short-sellers are closing positions and trigger a short-lived price rise, technical indicators remain bearish. While the S&P 500 is down 3 percent this year, the energy sector is down nearly 20 percent.
Iron ore for January delivery on the Dalian Commodity Exchange dropped 4 per cent to 362.50 yuan (HK$439) a tonne, a three-week low. Brent crude traded at around $43.40, after posting a new 52-week low of $42.51 in the morning.
Financial markets endured one in every of their worst days since the 2008 monetary disaster, beginning with a rout in Asian bourses on mounting fears that China’s slowing financial system will drag down the worldwide financial system with it. European and US shares joined the sharp promote-off, and commodities have been hammered. The Saudis would have made cuts to balance the market in the past but “now but now they are anxious about Iran“.
However, Iran’s Oil Minister Bijan Zanganeh said on Sunday that holding an emergency OPEC meeting could be “effective” in stabilising the oil prices, Iran’s oil ministry news agency Shana reported.
In the U.S., rigs drilling for oil climbed by 2 to 674 through August 21, according to Baker Hughes, an oilfield-services company.
EIA said global oil stocks are estimated to have grown by 2.3million barrels a day in the first seven months of 2015, the highest level since 1998.