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SINGAPORE – Oil prices were lower in Asian trade Monday, dragged down by prospects of weaker crude demand from China and a buildup in US stockpiles, analysts said.
New York’s main contract, West Texas Intermediate light sweet crude for delivery in July, dropped 64 cents to $93.51 a barrel in the morning and Brent North Sea crude for July delivery shed 41 cents to $102.23.
“The crude market has reacted negatively to comments from the Chinese government that it will tolerate a slower rate of economic growth,” Victor Shum, managing director at IHS Purvin and Gertz in Singapore, told AFP.
President Xi Jinping on Friday said China, the world’s second largest economy and top energy consumer, will not sacrifice the environment for temporary economic growth.
“The comments by Xi further deepened concerns about the Chinese economy after the poor manufacturing data last week,” Shum added.
Meanwhile, a less-than-expected drop in US crude stockpiles was also weighing on prices.
The US Department of Energy announced that American crude stockpiles fell by 300,000 barrels in the week ended May 17, less than market expectations for a drop of 600,000 barrels.
The data indicated weaker demand ahead of the US summer driving season when Americans traditionally take to the roads for their holidays.
“The stockpile buildup is a bearish factor that is causing increased selling of crude,” Shum said.