A combination of bearish economic events is weighing on crude oil futures on Friday, putting the markets in a position to finish the week lower. The central theme driving prices lower is a global economic slowdown. Contributing to selling pressure is widespread weakness in the Euro Zone, China and the United States.
U.S. West Texas Intermediate and international-benchmark Brent crude oil began Friday’s session under pressure due to a dovish European Central Bank and weak trade balance data from China, however, the selling accelerated after the U.S. Non-Farm Payrolls report badly missed the forecasts.
In the Euro Zone on Thursday, European Central Bank President Mario Draghi said the European economy was in “a period of continued weakness and pervasive uncertainty”. Conditions in the Euro Zone were perceived as so bad that the ECB: pushed back the timing of its first post-crisis interest rate hike to 2020, cut its economic forecasts and launched a new round of cheap bank loans.
In China on Friday, dollar-denominated February exports fell 21 percent from a year earlier. This was the biggest drop in three years and far worse than analysts had expected. Imports also dropped 5.2 percent. So far, oil demand has remained steady, where imports of crude oil remained above 10 million barrels per day (bpd). However, an economic slowdown is likely to dent fuel demand and pressure prices at some point.
Crude oil futures are extending earlier…
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