Oil Tumbles 8% As Weak China Data Revives Growth Fears

The CBOE's crude oil volatility index rose nearly 10 percent intraday on Tuesday, trading at its highest since March.

Monday's rally was fueled by Energy Information Administration (EIA) revised data showing U.S. oil output peaked at just above 9.6 million barrels per day (bpd) in April before falling by more than 300,000 bpd over the following two months.

"Even with the EIA revision, we're still producing over 9 million barrels per day, so I'm not convinced we've seen the fundamental shift to justify the rally," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

Some traders on Monday cited support from a commentary in the OPEC Bulletin publication suggesting the group is more willing to talk to non-OPEC producers about curbing output, even though it was broadly in line with previous comments.

A weaker dollar index provided no support for oil on Tuesday. The dollar's weakness often supports dollar-denominated commodities because they are less expensive for consumers using other currencies.

Investors awaited fresh snapshots of U.S. oil inventories due from industry and government starting with the American Petroleum Institute's report at 4:30 p.m. EDT (2030 GMT) on Tuesday.

Crude oil stocks were expected to have been unchanged last week, according to a Reuters survey of analysts.


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