NEW YORK, Aug. 31 (UPI) — Weak inflationary sentiment for the energy sector in Europe and Chinese reactions to stock market declines pushed crude oil prices lower in Monday trading.
Brent crude oil was off nearly 1.9 percent from Friday’s rally to move back below a psychological threshold to $49.23 per barrel in early Monday trading. The U.S. benchmark price, West Texas Intermediate, dropped about 1.25 percent to $44.65 per barrel.
Crude oil prices were lifted after a series of measures in Beijing gave investors confidence about the trajectory of the Chinese economy, which is growing but at levels below the double-digit gains seen at the start of the decade.
Chinese jitters helped spark one of the more volatile weeks of global trading, with most major indices posting major declines in terms of overall percent. The Chinese Minister of Public Security said nearly 200 people could face charges for issuing statements that may have “caused panic, misled the public and resulted in disorders in stock market or society,” China’s official Xinhua News Agency reported.
The Shanghai Composite Index closed down about eight tenths of one percent Monday.
In Europe, the energy sector was by far the largest contributor to slow inflation in the regional economy. Eurostat, the statistics office for the European Union, saidinflation this month was expected to be relatively unchanged from July at 0.2 percent. The regional energy sector contracted by 7.1 percent, compared with 5.6 percent in July.
“That has been especially true recently, as the drop in oil prices over the past year, on the order of about 60 percent, has led directly to lower inflation as it feeds through to lower prices of gasoline and other energy items,” he said.
The low price of crude oil is curbing spending in the energy sector, notably in the exploration and production side of the industry. The U.S. Energy Information Administration said it revised its crude oil production data lower by 100,000 barrels per day in June, with most of the losses coming from Texas, the nation’s top oil-producing state.