Few signs of long-term optimism in the oil market as Brent crude oil sheds 2.2 percent to start trading Wednesday, one day after China reported its weakest growth in a quarter century. File photo by Monika Graff/UPI |
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NEW YORK, Jan. 20 (UPI) -- Optimism over Chinese growth maturation evaporated Wednesday as markets measured long-term economic sentiments, pushing crude oil prices sharply lower.
Bearish sentiments re-emerged in early Wednesday trading after most major stock indices moved sharply lower. One day after Beijing reported 2015 economic growth was the slowest in 25 years, the central People's Bank of China injected more than $20 billion into the money market in an effort to keep momentum moving forward.
China's growth rate was in line with Beijing's target, though a slowdown in the world's No. 2 economy adds concern about the pace of demand. The benchmark Shanghai Composite Index closed lower by 1 percent and futures indicate a down day on Wall Street.
Crude oil prices reacted strongly to Chinese figures Tuesday, though optimism vanished early in the session Wednesday as long-term growth concerns set in.
Brent crude oil opened in New York at $28.11 per barrel, down 2.2 percent from the previous day. West Texas Intermediate, the U.S. benchmark for crude oil prices, mirrored Brent's decline of 2.2 percent, starting the day at $27.82 per barrel.
Brent crude oil prices are down 22 percent since the start of the year.
With the International Energy Agency describing the global energy market as "bloated," supply-side pressures are expected to linger at least through 2016.
Adam Sieminski, the director of the U.S. Energy Information Administration, told lawmakers on Capitol Hill it could be 2017 before a healthy balance between supply and demand returns.
Answering a series of emailed questions, a spokesperson for Shell said market recovery is inevitable, but when and to what degree is up for debate.
