Oil prices fall continue Asia amid growth concerns in Asia

May 15, 2023

Oil prices fell further in Asian trade on Monday, extending their losses for a fourth straight week, as concerns over slowing economic growth outweighed hopes for a recovery in demand.

Brent crude futures fell 0.7% to $73.67 a barrel, while West Texas Intermediate crude futures fell 0.7% to $69.56 a barrel. Both contracts have fallen between 1.8% and 2% over the past week.

The sell-off in oil prices comes as investors grow increasingly concerned about the global economic outlook. Recent data from the United States and China, the world’s two largest economies, has pointed to slowing growth.

In the United States, weak consumer sentiment data released on Friday further rattled markets. This was coupled with growing uncertainty over the U.S. debt ceiling, as well as renewed concerns of a banking collapse in the country.

In China, recent data indicates that a post-COVID economic rebound is running out of steam. The country’s massive manufacturing sector is struggling with slowing demand, and Chinese inflation has failed to pick up despite the lifting of anti-COVID restrictions.

This has spurred doubts over forecasts that a recovery in China will drive oil demand to record highs this year. A monthly report from the International Energy Agency, due on Tuesday, is also expected to provide more cues on that end.

The strength of the dollar is also weighing on oil prices. The dollar has rebounded from over one-year lows, making oil more expensive for holders of other currencies.

With focus now turning to more economic data and number of Federal Reserve speakers this week, investors will be looking for any signs that the global economy is on track for a sustained recovery. If the data continues to disappoint, oil prices could fall further.