Brent and Crude oil prices are getting hammered today and both of have them dropped over 5% today. Chinese retail sales data and US Empire States manufacturing numbers have made traders worried. Investors are asking themselves if they should buy oil amid the big sell off
Brent and Crude Oil Chart
Oil Prices Dropping Now
Brent oil is down over 5%, and Crude oil prices have tanked over 5.21% at the time of writing this article. Traders are selling oil because they believe that oil demand is going to shift significantly as economic data indicates that the US economy, the biggest economy in the world, and China have both applied brakes.
Reason for Oil Prices Going Lower
The data out of China didn’t bring any good news for the black gold, and coming into the European session from the Asian session, oil prices were already under punishment. It was the Chinese retail sales data that drove the pessimism among traders. The picture became, even uglier when the US Empire State manufacturing data came out, which literally fell off the cliff. This US economic data could not have brought any more bad news for the oil prices.
In addition to the above two factors, an important factor that is also driving the lower oil prices today is the expectations around the Iranian nuclear deal. Traders believe that this deal is going to happen, and Iranian oil will come to the market as the US and it allies have little to no choice because oil demand will increase as we are coming towards the end of summer. With Russian sanctions in place on Russian oil, choices are limited. So the fear of extra supply coming to the market is hammering the prices.
So for now it seems that oil prices are likely to continue to drop from here onwards and this represents an opportunity for traders and investors to get involved in.