Oil price falls on weak China data and rate cut
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4.45pm: China slowdown
Oil prices were dragged sharply lower by disappointing economic data from China, the world’s largest crude oil importer and second-largest crude oil consumer.
The price of West Texas Intermediate and Brent crude fell by more than 5% as China’s central bank cut lending rates in response to weak July economic data that resulted from its tough Covid policy.
The rate cut by the People’s Bank of China and disappointing economic data came as a surprise to the market, with forecasts that the country will miss its targeted economic growth rate of 5-5.5% in the second half of the year.
WTI fell $4.87 (5.3%) to $87.22 per barrel, while Brent crude was down $4.92 (5%) to $93.23 per barrel.
The price fall came as industry body Offshore Energies UK warned that a new round of windfall taxes, proposed by the Labour party, would leave the UK facing decades of energy insecurity, heap further costs on consumers and risk making the nation ever more dependent on other countries for the gas and oil needed to keep the nation’s lights on, its homes warm and to fuel its transport system.
In the first hour of trading on Wall Street, the Dow Jones Industrial Average was down 0.11%, while the S&P 500 was 0.26% weaker and the Nasdaq Composite slid 0.22%.
On the FTSE 100, miners were among the worst performers. Rio Tinto, Antofagasta, Anglo American and Glencore all fell back.
Oil giants Shell and BP also slid in response to the lower oil price.
Despite posting record half year results, long-term savings group Phoenix saw its shares fall 5.80p (0.85%) to 675.3p.
London’s Heathrow Airport said it will extend the cap on flight departures to 29 October as it looks to support more “reliable and resilient” passenger journeys.
After dipping ahead of Wall Street’s opening, the FTSE 100 closed 8.26 points higher at 7,509.15.