Forexpros – Crude oil futures were down for a second day on Tuesday, as data showing China’s economy grew at the slowest pace in two years and ongoing concerns over the debt crisis in the euro zone weighed on riskier assets.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD86.14 a barrel during European morning trade, dropping 0.55%.
It earlier fell by as much as 0.95% to trade at USD85.77 a barrel, the lowest price since October 14.
Earlier in the day, official data showed that China’s economy expanded at a rate of 9.1% in the third quarter of 2011, below forecasts of 9.2% and slowing from growth of 9.5% in the preceding quarter.
It was the slowest rate of growth since the second quarter of 2009, fuelling concerns over the health of the world’s second largest economy.
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.
Crude prices came under additional pressure as hopes for a comprehensive solution to the financial crisis in the euro zone were quashed on Monday after German Finance Minister Wolfgang Schaeuble said the EU summit due to be held on October 23 would not yield a “definitive solution” to the crisis.
Meanwhile, ratings agency Moody’s put France on three months notice that “pressure from weaker debt metrics,” could leave the country with a negative credit outlook and may even result in a downgrade.
The news prompted investors to shun riskier assets, such as stocks and commodities, and flock to traditional safe haven assets like the U.S. dollar.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 77.69.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery shed 0.64% to trade at USD109.45 a barrel.
The spread between the Brent and the crude contracts narrowed to USD23.31 a barrel, down from a record high of USD28.10 a barrel set on Friday.
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