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Oil market: economic worries outweigh geopolitics

OANDA:BCOUSD   Brent Crude Oil
Crude oil prices extend losses on Tuesday after a short-lived recovery in the second half of last week. Brent dipped below the $60 handle on Monday and reached lows around $59.50 ahead of European session today.

Traders’ behavior shows that economic worries outweigh geopolitical concerns amid tanker attacks. The latest portion of dismal Chinese data added to the gloomy sentiment towards the outlook for the global economy. Industrial output growth in the world’s second largest economy unexpectedly slowed to a more than 17-year low. Meanwhile, the US Empire State Manufacturing Index dipped to -8.6 from 17.8 in May, the biggest slide for a data series that goes back to 2001. Unsurprisingly, the ugly numbers fueled fears of lower worldwide oil demand.

In this context, the market participants will continue to closely monitor the incoming economic data and will also focus on the FOMC meeting that concludes on Wednesday. Should the central bank’s rhetoric come not as dovish as expected, the riskier assets, including oil , will come under pressure while the greenback will have a sigh of relief.
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