Crude Down As Growth Concerns Come To Fore Again

Oil prices were down on Monday in light trading following the China manufacturing PMI falling into contractionary territory below 50. Wednesday’s Fed meeting, where rates are forecast to be raised another 25bp, is also weighing on crude. WTI is down 1.3% to $75.66/bbl off the intraday low of $74.54 and Brent is also 1.3% lower to $79.31. The USD index is 0.5% higher.

• Crude markets were concerned by the rescue of another troubled US bank, First Republic, and the implications that may have for growth going forward. Expectations of further Fed tightening on Wednesday and a disappointing China PMI exacerbated these worries.
• According to Bloomberg there have been strong oil exports from Latin America to Asia. Exports of heavy crude rose 28% m/m to their highest in around two years with about half going to China, India, Singapore and Malaysia. Shipments from the US Gulf Coast fell 10% in April due to a 16% drop to Europe but stronger exports to Asia, including a 10.5% increase to China. But shipments from Canada’s Whiffen Head grew 9% due to a 50% pickup in demand from Europe.