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Oil prices down in Asia as China stocks plunge weigh
[SINGAPORE] Oil prices fell further in Asia Tuesday after a plunge in Chinese stocks jolted global markets and added to fears about an oversupply of the commodity.
US benchmark West Texas Intermediate for September delivery fell 43 cents to US$46.96 and Brent crude for September lost 55 cents to US$52.92.
Both contracts closed lower on Monday.
Shanghai dived 8.48 per cent Monday, its biggest fall in more than eight years, on worries the Chinese government will pull back on support measures put in place at the start of the month to prevent a meltdown in the face of a market rout.
The losses continues Tuesday, falling four percent in the morning despite renewed government pledges of support.
"When the Chinese market drops to such an extent, it sparks a lot of fear among investors. The drop in crude oil prices is because of that fear," said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
"We really have to see how the China market will move going forward," he told AFP.
Analysts fear the turmoil in China's stock market will affect demand in the world's second biggest economy and top energy consuming nation.
"We would be watching the Chinese equity markets closely," said Bernard Aw, market strategist at IG Markets Singapore.
"More specifically, it would be interesting to see what else the Chinese government can roll out to defend the markets." Oil prices have also been depressed due to a global crude oversupply coming from strong production in the United States and the Organization of the Petroleum Exporting Countries led by Saudi Arabia.