Oil prices fell yesterday as weak Japanese and Chinese economic data fuelled concerns that growth could be grinding to a halt.
Japan’s core machinery orders fell 3.6% in July, much worse than a 3.7% increase expected by economists.
In Asia’s biggest economy China, the producer price index fell 5.9% in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009, data showed on Thursday.
Car sales in China also fell 3% in August from a year ago to 1.7 million vehicles, the fifth straight monthly fall as the country’s slowest economic expansion in 25 years wiped out growth in the world’s top auto market.
ANZ bank said global growth for 2016 and 2017 would hold around 3.5%, revised down from the 4% it had previously forecast.
Benchmark Brent crude oil futures fell by 0.8% to $47.24 per barrel at 0644 GMT. US crude futures were down just 0.25% at $44.03 a barrel.
Oil prices have fallen over 50% since June 2014 as soaring output clashed with slowing economies in Asia, the main growth engine for commodities over the previous years.
The weakening in Asia’s economies and commodity demand is having far-reaching effects.
On Wednesday, Standard & Poor’s downgraded Brazil to a junk-grade credit rating, just seven years after it first won an investment-grade rating. Brazil, one of the main commodity exporters to China and a member of the so-called BRICS emerging economies - Brazil, Russia, India, China and South Africa - was until recently seen as one of the key drivers of the global economy.
The oil price fall was compounded after the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, decided last November to keep output high in favour of market share over prices.
“In the first half of 2015, Saudi Arabia exported on average 4.4 million barrels per day (b/d) of crude oil to seven major trading partners in Asia, making up more than half of Saudi Arabia’s total crude oil exports over that period,” the US Energy Information Administration (EIA) said.
