Oil Slumps on China Worries; Back In Correlation with Wall Street

© Reuters.

Investing.com – Oil traders’ safest bet — “when all else is in doubt, just follow the stock market” — seems to be back.

The stunning comeback rally that took crude futures by storm since Christmas appears to be stalling as multiple data points suggest that China’s economy — the world’s second largest and the bulwark of global growth — is slowing.

New York-traded settled down $1.08, or 2.1%, at $50.51 per barrel as stocks on Wall Street slipped after an unexpected drop in China’s exports in December.

London-traded , the global oil benchmark, slid by $1.43, or 2.4%, to $59.05 by 2:46 PM ET (19:46 GMT)

China’s December exports fell by 4.4 percent from last year, the biggest drop in 2 years. Chinese imports also plunged by 7.6 percent, the biggest drop since 2016. The data reinforced concerns that U.S. tariffs were taking a toll on Chinese goods, prompting even U.S. tech giant Apple Inc (O:NASDAQ:), which manufactures out of China, to issue a profit warning.

“On the crude oil front, the news from China took this market out of the green as well,” Dan Flynn, analyst at The Price Futures Group in Chicago wrote in his Monday note, as WTI and Brent became correlated with the stock market again after a near uninterrupted three-week rally.

While oil has rallied with little resistance so far this year, the enigma to many is how much further the current bull market can go without flipping as Saudi determination to cut supply faces China’s vulnerable economy and its drag on global energy demand.

Saudi Energy Minister Khalid al-Falih said last week the Kingdom was pumping approximately 800,000 barrels less a day from a record high of 10.2 million barrels per day in November. The amount Riyadh would ship overseas in

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