NEW YORK, N.Y. – Oil prices fell more than two per cent Thursday as the global economic slowdown took a toll on China.
China, the world’s second-largest oil consumer behind the United States, has been pushing up oil demand as its economy expands But a drop in its export growth last month showed that China has been affected by the sluggish U.S. and European economies.
Consumers are spending less and buying fewer Chinese products. If China’s exports continue to cool, its economy will slow and its appetite for oil will diminish.
“We’re interconnected,” independent analyst Andrew Lipow said. “A slowdown in consumption in the U.S. and Europe is being felt over there.”
Benchmark crude fell $2.16, or 2.5 per cent, to US$83.40 a barrel in Thursday afternoon trading in New York. Brent crude, used to price many international kinds of oil, lost $1.09 to US$110.27 a barrel in London.
The most recent economic data in the U.S. showed little sign of the economy picking up steam. The number of people applying for unemployment benefits fell slightly last week, but not by enough to signal job growth.
And the U.S. Energy Department said that oil and natural gas supplies grew unexpectedly last week, while refineries slowed down and gasoline supplies dropped — all signs of soft demand.
In other energy commodities trading, heating oil was virtually unchanged at US$2.9387 a U.S. gallon (3.79 litres), while gasoline futures fell two cents to US$2.7258 a U.S. gallon. Natural gas rose four cents to $3.529 per 1,000 cubic feet.
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