Commodity Market: WTI Crude Oil extends losses as China demand worries outweigh US debt progress

Futures on US West Texas Intermediate Crude Oil retreated for a third consecutive trading day on Wednesday, as concerns over slowing demand in the world’s largest oil importer China overshadowed some progress in US debt ceiling talks.

The latest macro data coming out of China showed manufacturing sector activity had shrunk at a steeper pace than anticipated in May due to weakening demand.

China’s Manufacturing Purchasing Managers’ Index came in at a reading of 48.8 in May, down from 49.2 in April. In comparison, market consensus had pointed to a level of 49.4.

“With China’s industrial output and fixed-asset investment growing more slowly than expected last month, markets are worried that China’s commodity demand is weakening more quickly than anticipated,” Vivek Dhar, director of commodities research at Commonwealth Bank of Australia, was quoted as saying by Reuters.

“The current pessimism surrounding China’s commodity demand stands in contrast to the optimism at the beginning of this year,” he said.

Market players remained wary despite legislation to lift the $31.4 trillion US debt ceiling and achieve new federal spending cuts overcame an important hurdle on Tuesday and advanced to the full House of Representatives for debate.

The debt deadline almost coincides with the June 4th OPEC+ meeting.

As of 8:56 GMT on Wednesday WTI Crude Oil Futures for July delivery were losing 0.94% to trade at $68.81 per barrel.

WTI Crude Oil Futures have retreated 10.28% so far this month, following a 1.47% gain in April.

At the same time, Brent Oil Futures for August delivery were losing 0.71% on the day to trade at $73.19 per barrel.

Brent Oil Futures have retreated 8.22% so far this month, following another 0.30% loss in April.