WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange traded lower at the start of a new business week amid growing concerns that a systemic slowdown in China's economy could temper global oil demand.
As financial and political leaders gather this week at the Swiss resort town of Davos for the World Economic Forum, investors are reassessing the global growth outlook amid mounting evidence of the severity of the slowdown in China's economy. China, the world's biggest importer of crude reported fourth quarter gross domestic product at 6.4%, the lowest point in almost a quarter century. This is raising serious concerns over structural growth deceleration in the second largest economy, especially after China reported the sharp drop in its trade figures just a week ago.
Adding to the heightening worry about Chinese data, the International Monetary Fund revised its global growth outlook down to 3.5% for 2019 and by 0.1% for 2020 to 3.6%. Even though the revisions are modest, the fund's managing director, Christine Lagarde, said "the risks to more significant downward corrections are increasing."
These are just the latest signposts, suggesting that the negative impact of the trade war between the United States and China on the global economic growth may be greater than previously estimated. As Washington and Beijing prepare for the critical round of trade talks next week, investors will remain focused on economic data coming from China and any signs of the resolution in trade tensions between the two economic powerhouses, which rocked global markets during the latter part of 2018.
In midmorning trade, West Texas Intermediate, with the February contract set to expire at todays close, traded $1.32 lower to $52.48 barrel (bbl), with the March contract trading at a $0.25 premium to the expiring contract. ICE March Brent registered a $1.20 loss to $61.54 bbl. Nymex February ULSD futures dipped 2.71 cents to $1.8889 gallon and February RBOB futures traded $1.4114, down 4.14 cents at the start of Tuesday trading session.
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