Oil prices decline due to faltering Chinese economy

Oil prices fell on Wednesday under the weight of weak economic activity in China, the largest importer of crude, but their first monthly gains since September still loomed as tension in the Middle East fueled concerns about supplies.

According to Reuters, Brent crude futures for March delivery, which expire today, Wednesday, fell 87 cents, or about 1.1%, to $82 a barrel by 1103 GMT. The most actively traded April contract fell 80 cents, or about 1%, to $81.70.

US West Texas Intermediate crude futures lost 82 cents, or approximately 1.1%, to $77 per barrel.

An official survey of factories showed on Wednesday that manufacturing activity in China, the world’s second largest economy, contracted for the fourth consecutive month in January.

“Factory data confirms our view that China, at least for the time being, is an obstacle to the growth of global oil demand,” said Tamas Varga of oil brokerage BVM.

At the same time, the war between Israel and the Palestinian Islamic Resistance Movement (Hamas) expanded into a conflict in the Red Sea between the United States and Houthi militants allied with Iran.

While this has led to disruptions in the shipping of oil and natural gas tankers, driving up delivery costs and beginning to impact oil supplies, a Reuters poll indicated that record production in the West and sluggish economic growth will suppress prices and limit any geopolitical risk premium.