Investing.com – Crude oil futures extended losses on Wednesday, falling to a fresh daily low after China’s central bank raised interest rates for the fifth time in nine months, sparking concerns over a slowdown in demand from the world’s second largest oil consumer.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD96.12 a barrel during European afternoon trade, dropping 0.65%.
It earlier fell as much as 0.9% to trade at a daily low of USD95.91 a barrel.
The People’s Bank of China said earlier that it had raised its benchmark interest rate by 0.25% to 6.56% effective July 7.
It was the fifth interest rate hike since October 2010 and the third in 2011, in an effort to curb accelerating consumer prices in China, which rose to a 34-month high in May.
Global financial service provider HSBC said in a report following the announcement that the move suggested the top priority for authorities remained cooling inflation pressures, “despite recent fears of an economic slowdown.”
China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2012.
Prices came under pressure after the U.S. dollar rose to a five-day high against the euro after ratings agency Moody’s downgraded Portugal’s sovereign debt rating to junk status.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.5% to trade at 75.39, the highest level since June 29.
Oil prices typically weaken when the greenback strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, markets were awaiting fresh information on U.S. stockpiles of crude and refined products, which come a day later than usual due to the Independence Day holiday.
The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show stockpiles declined by 2.5 million barrels last week, the longest streak of withdrawals since January.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 1.2% to trade at USD112.14 a barrel, up USD16.02 on its U.S. counterpart.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at USD96.12 a barrel during European afternoon trade, dropping 0.65%.
It earlier fell as much as 0.9% to trade at a daily low of USD95.91 a barrel.
The People’s Bank of China said earlier that it had raised its benchmark interest rate by 0.25% to 6.56% effective July 7.
It was the fifth interest rate hike since October 2010 and the third in 2011, in an effort to curb accelerating consumer prices in China, which rose to a 34-month high in May.
Global financial service provider HSBC said in a report following the announcement that the move suggested the top priority for authorities remained cooling inflation pressures, “despite recent fears of an economic slowdown.”
China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2012.
Prices came under pressure after the U.S. dollar rose to a five-day high against the euro after ratings agency Moody’s downgraded Portugal’s sovereign debt rating to junk status.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.5% to trade at 75.39, the highest level since June 29.
Oil prices typically weaken when the greenback strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Meanwhile, markets were awaiting fresh information on U.S. stockpiles of crude and refined products, which come a day later than usual due to the Independence Day holiday.
The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show stockpiles declined by 2.5 million barrels last week, the longest streak of withdrawals since January.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery slumped 1.2% to trade at USD112.14 a barrel, up USD16.02 on its U.S. counterpart.