NEW YORK, Feb. 1 (UPI) -- As was the case with the start of January, weak economic data from China led to dramatic losses for crude oil on the first full trading day of the month.
The central People's Bank of China announced Monday it injected $229 billion into the economy in an effort to ensure "stability in the currency market." China last year devalued its currency amid signs of an economic cool down.
Last week, the International Monetary Fund said an increase in the price of homes in China masked underlying weaknesses. On Monday, the National Bureau of Statistic reported a purchasing managers' index at 49.4, down from the December rating of 49.7. January's PMI marked the sixth straight loss for China.
China's economic appetite weighed on crude oil prices for the first trading day in February. Brent crude oil moved lower by 2.75 percent to start the day in New York at $35 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, lost 3.7 percent to open in New York at $32.37 per barrel.
Crude oil prices are lower in part because demand isn't enough to keep up with over-production. Lower prices may be acting as a de facto form of consumer stimulus, though wage growth, particularly in the United States, has remained relatively weak. Data from the U.S. Bureau of Economic Analysis released Monday show personal income and disposable personal income relatively unchanged in December when compared with the previous month.
Last week, the U.S. government reported gross domestic product grew in the fourth quarter by 0.7 percent against previous reports of around 2 percent growth.
Most analysts expect demand to balance out with supplies and Continental Resources, one of the largest players in U.S. shale, was one of the first last month to report an expected decline in production for 2016.
By historical standards, crude oil prices should remain low at least through this year. The World Bank lowered its 2016 forecast from $51 per barrel to $37 barrel in part because of weak economic growth.