Oil Prices Go Down On Weak Eu Activity Data

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Oil Prices Go Down On Weak Eu Activity Data

Oil Prices Go Down To $85.50 On Weak EU Activity Data

In Tuesday's trading session, the oil prices turned lower from yearly highs after the release of weak EU and Chinese activity data.

Recent data has shown that major headwinds are still present in China, which also happens to be among the top oil importers. After the data release, the US crude futures were down by 0.1%, while the Brent futures were down by 0.5%.

The trading price of the US crude futures was $85.50, while the Brent future was last seen near $88.52 after the data release.

WTI & Brent At Yearly Highs

Just a week ago, the Brent futures and the US crude futures recorded major gains, which allowed the Brent & WTI to reach their yearly highs.

However, the sentiment surrounding the oil prices shattered on Tuesday as economic indicators showed a slowdown in the activity of Chinese services. The index, which measures the activity of the services sector, showed an increase of 51.8 for August.

Just a month earlier, the same index showed a reading of 54.1, which tells us that things are getting harder for the Chinese economy.

According to experts, the economic growth of China is very crucial for the demand side of oil. But ever since the COVID hit, the Chinese economy has failed to stage an impressive recovery.

Besides the Chinese data, the data coming out of Europe is also disappointing which is also weighing heavily on the oil prices. The PMI data from the Eurozone showed a contraction in the services industry for August. In fact, the chances of a recession in the EU services industry have increased after the recent readings.

But despite the short-term decline in the oil spot and futures contracts, the bigger picture is still positive for the oil market. Looking ahead, the production cuts from big oil-producing countries will continue to play a major role in supporting oil prices.

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