Financial Market Jitters Put Fresh Dent in Brent Crude

摘要

Uncertainty and anxiety in global financial markets took their toll on oil prices last week, dragging global crude benchmark Brent below the $60-$70 per barrel trading range that it had held, to the surprise of many, for the past three months. Fragile worldwide market sentiment and substantial volatility in all commodity and financial markets were fed by a teetering Chinese equity market and Greece’s “no” vote in its austerity referendum. Adding to the downward pressure on oil prices was the fear that global economic growth might be slowing down just as prospects are growing of more oil hitting the market in the second half of the year than initially thought, with the US rig count moving up again after 29 consecutive weekly falls and Iran keen to start selling oil as soon as a nuclear deal with world powers has been agreed. Predictions that a global crude surplus would push Brent well below $60/bbl sometime in the second quarter turned out to be premature, as much of the crude surplus was absorbed in inventories or refined into products. But Jul. 6 saw ICE Brent futures plunge 6.3% to close at $56.54/bbl on a mix of economic, financial, technical and fundamental factors. A key uncertainty is the Chinese stock market, where Beijing’s injection of rescue funds could not prevent dozens of companies from halting trading to prevent steep losses. Expectations of lower economic growth in China hit all commodities, but oil especially.