Crude Oil Ends Lower As China Demand Drops

(RTTNews) - U.S. crude oil ended sharply lower on Monday, on concerns over a slump in demand from China and the after effects of the Organization of the Petroleum Exporting Countries maintaining its current production levels as concerns of supply glut persist.

Chinese oil import dropped 11 percent to 23.24 million tons in May from a year ago, official data from the General Administration of Customs showed Monday. China's overall imports plunged 17.6 percent, bigger than the 10 percent fall forecast by economists.

China is the second largest consumer of oil in the world after the United States, and has been a driver for the recent uptick in prices.

Investors also await a slew of oil reports this week with the U.S. Energy Information Administration slated to release its monthly short-term energy outlook on Tuesday, apart from its weekly oil inventory report due Wednesday. The Organization of the Oil Exporting Countries is also scheduled to release its oil report on Wednesday, even as the International Energy Agency is set to release its oil report on Thursday.

Light Sweet Crude Oil futures for July delivery, the most actively traded contract, dropped $0.99 or 1.7 percent, to settle at $58.14 a barrel on the New York Mercantile Exchange Monday.

Crude prices for July delivery scaled a high of $59.13 a barrel intraday and a low of $57.86.

On Friday, crude oil jumped $1.13 or 2.0 percent, to settle at $59.13 a barrel, on reports of further decline in U.S. rig counts and after the Organization of the Petroleum Exporting Countries decided to maintain its current production levels even as concerns of a supply glut scenario persisted. Crude oil futures had dropped about 1.9 percent last week, after 11 consecutive weeks of losses.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.29 on Monday, down from its previous close of 96.40 on Friday in late North American trade. The dollar scaled a high of 96.55 intraday and a low of 95.19.

The euro trended higher against the dollar at $1.1279 on Monday, as compared to its previous close of $1.1115 in North American trade late Friday. The euro scaled a high of $1.1296 intraday and a low of $1.1085.

In economic news, Chinese exports fell in May albeit less than expected, while imports declined sharply lifting the trade surplus notably to an above-expected level. Exports dropped 2.5 percent in May from a year ago, data from the General Administration of Customs showed Monday. Shipments were forecast to decline by 4.4 percent after contracting 6.4 percent in April.

At the same time, imports plunged 17.6 percent, bigger than a 10 percent fall forecast by economists. Imports had decreased 16.2 percent in April. Consequently, the trade surplus rose to $59.49 billion from $34.1 billion in April. It was expected to rise to $44.8 billion.

Eurozone investor confidence declined to a four-month low in June, survey data from the think tank Sentix showed Monday. The investor confidence index fell to 17.1 in June from 19.6 in May. This was the lowest reading since February, when the score was 12.4. The reading was above the expected score of 18.9.

Germany's exports increased unexpectedly in April, while industrial production rebounded at a faster-than-expected pace suggesting that the economy has not lost its steam. Exports rose a seasonally and calender-adjusted 1.9 percent month-on-month in April, faster than previous month's 1.3 percent increase, provisional data from Destatis showed Monday.

This was the third consecutive rise in exports and came in contrast to a 0.4 percent drop forecast by economists. Meanwhile, imports fell 1.3 percent in April from the prior month, in contrast to economists' expectations for a 0.5 percent rise. It was the first decrease in three months. In March, imports grew 2.4 percent.

German industrial production expanded 0.9 percent month-on-month in April, reversing a revised 0.4 percent fall in March, another report showed today. It was larger than the expected 0.5 percent increase and also the biggest growth for the year.

Elsewhere in Europe, the United Kingdom's growth outlook was downgraded, due largely to some weaker-than-expected first quarter gross domestic product growth, the Confederation of British Industry said Monday. The business group lowered the growth outlook for this year to 2.4 percent from 2.7 percent predicted in February. For 2016, the growth forecast was lowered to 2.5 percent from the previous estimate of 2.6 percent. Growth in 2014 was 2.8 percent.