Oil fell for a fourth day, marking its longest run of losses since March, pressured by a rising dollar and economic data illustrating the U.S. recovery’s uneven path.
Futures declined 1% on Tuesday. The dollar climbed, weakening the appeal of commodities priced in the currency. U.S. retail sales fell in July by more than forecast, while factory production strengthened the most in four months. Data from China on Monday revealed a slowdown in the economy last month.
“Poor data coming out of China is ground zero for reignited global concern surrounding Covid-19,” says Phil Flynn, senior market analyst at Price Futures Group. “Although indicators in the U.S. shows a better situation than China, as the second largest economy, what happens in the region has huge market impact.”
After a vigorous rally in the first half of the year, crude’s advance has been checked in recent weeks. The delta variant has spurred fresh curbs on mobility in many nations including China, harming energy consumption. Against that backdrop, JPMorgan Chase & Co. has been among banks reducing oil price forecasts.
“China is the world’s engine for participated demand growth,” says Thomas Finlon, director of Energy Analytics Group LLC. “When demand shows signs of a downturn, you can be sure the effects will spread.”