Oil tumble but experts predict a balance next year
Investors worry that a stock market crash could destabilize the Chinese economy and cut fuel demand
Oil hit four-month lows after a steep drop in Chinese stock markets as the Shanghai composite closed down 1.7% after recovering from a 4% loss in early trading while the Shenzhen composite shed 2.2%.
This means that China’s stock market continues its dramatic slide after an 8.5% decline on Monday.
China is the world's biggest energy consumer and a huge oil importer. Investors worry that a stock market crash could destabilize the Chinese economy and cut fuel demand.
Brent crude fell to its lowest in four months at $53.63 a barrel, down 99 cents by 1035 GMT. Concerns were also raised regarding copper, aluminum, gold and raw industrials spot price index is now at its lowest level since November 2009, according to Reuters.
Experts told Al Arabiya News that there is not enough demand partly because global economic growth, especially in China, is slowing. However they stressed that the concerns about the decline in prices under $50 are still unrealistic as the approaching Iranian production return to the market will offer a higher surplus.
Energy and markets analyst Mohammad Al Shatti told Al Arabiya News: "The prices may tend to recover with Iranian supplies delayed to the first half of 2016, which would coincide with the increase of the global demand. It will contribute in balancing the prices.”