On Tuesday, oil dropped its most in one day since the beginning of the year. Crude hit a seven-week low on concerns that a potential slowdown in China, the No. 2 economy in the world, added to the global demand worries. Trade data from March showed import growth in China fell below what was expected by economists indicating that first quarter demand was tepid, even though the price of crude remained high.
An accumulation of concerns on the economy are haunting Wall Street with the import date from China, the jobs report of last week for the U.S. and the crisis in Europe still troubling investors minds.
Also feeding the market with pessimism was a monthly report by the U.S. Energy Information Administration that cut the world demand forecast for oil growth for the next two years, while increasing its forecast of oil output for non-OPEC countries. Brent crude dropped to $119.88 after falling $2.79 per barrel, the lowest close since mid February. U.S. crude fell to $101.02 after dropping $1.44 on the day. It was the lowest price for U.S. crude since February 14.
One expert said, “The China data is bearish for oil, Europe is scary again and if talks go badly in Iran, fear will return. Oil prices fell somewhat due to an announcement made by Iran that it would cut exports of oil to Spain. Iran may also stop shipments to Italy and Germany ahead of this weekend’s talks with other countries.
Industry sources said the sanctions set to be placed by the U.S. and European Union aimed at stopping the nuclear ambitions of Iran already have decreased the amount of imports by some of the countries in Europe.