Fear of China Growth Crush Oil & Commodities
US oil prices remained on their downhill slide Monday. In the U.S. a barrel of crude hit a 52-week low coming in at $47.20 a barrel. This launched investors into reeling and reacting to China's largest 1-day stock sell-off since 2007. Worries over an oil glut continued to gain momentum as the fears of economic slowdown in China swept the world.
Today China is the world's second-largest economy. It is, however, no longer growing at its old double-digit pace like it was only a few short years ago. This is causing investors worldwide to question its reported 7% growth during the second quarter, and to wonder if that figure truly reflects China's economy to date.
The world oil market is suffering already from a lack of supply. Saudi Arabia along with other oil-producing Middle East countries are still producing at a record pace. Today the U.S. has once again emerged as one of the key players in the world market for oil. Oil prices are falling sharply, mostly because of China's slowdown (which may be powered by the extensive plunge in Chinese stocks of around 30% since their peak in June), and a strong U.S. dollar which makes the oil more expensive.
In June of 2014, one barrel of West-Texas Intermediate crude was trading at over $107 per barrel. Today, however, it is down around 56% from the most recent peak, placing it deep into bear-market territory. This is a drop of 20% or even more.
Commodities like lumber and copper, that have been gobbled up by China as they built their massive infrastructure, have also been subjected to a massive selling with sizable losses, and the China growth story moves from a positive certainty into fears of a really hard landing.
Gerald Celente :: China growth slows to the lowest levels since the 2008 financial crisis