SINGAPORE: Oil prices fell further in Asia on Tuesday after a plunge in Chinese stocks jolted global markets and added to fears about an oversupply of the commodity.
US benchmark West Texas Intermediate for September delivery fell 17 cents to $47.22 and
Brent crude for September lost 30 cents to $53.17.
Both contracts closed lower on Monday.
Shanghai dived 8.48 percent Monday, its biggest fall in more than eight years, on worries the Chinese government will pull back on support measures put in place at the start of the month to prevent a meltdown in the face of a market rout.
The losses continued Tuesday, defying government vows to support the market, with the benchmark Shanghai Composite Index slipping 1.0 percent by the break.
It gyrated heavily during the session, falling as much as 5.0 percent and rising almost one percent into positive territory.
“When the Chinese market drops to such an extent, it sparks a lot of fear among investors. The drop in crude oil prices is because of that fear,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.
“We really have to see how the China market will move going forward,” he told Agence France-Presse.
Analysts fear the turmoil in China’s stock market will affect demand in the world’s second biggest economy and top energy consuming nation.
“We would be watching the Chinese equity markets closely,” said Bernard Aw, market strategist at IG Markets Singapore.
“More specifically, it would be interesting to see what else the Chinese government can roll out to defend the markets.”