After hitting close to US$83/barrel in early August, crude oil futures on the Nymex had boosted sentiments in polymer markets particularly in Asia with sellers finding extra support to raise their prices and buying interest picking up, as per Chemorbis. However, crude oil has plunged by almost US$6 last week, shifting sentiments again in many downstream markets.
Crude oil futures had a buoyant start to the month of August, settling above US$80/barrel after trading at US$72-79/barrel through July. Soaring stock markets and the noticeable appreciation of the euro against the US dollar, which saw levels as high as 1.31-1.32, were cited as the main reasons behind the firm crude oil prices in the first 10 working days of August. Oil prices managed to retain their strength above the US$80/barrel threshold even after the weekly data of the US Energy Information Administration showed a decrease in US oil demand and higher stocks. However, the energy markets responded to these bearish developments in the second week of August as an increasing amount of economic data was revealed with negative results. Along with China’s slowing economic growth as a result of the government’s efforts to cool down the housing market and infrastructure investment, imports of China have also lost steam in many items including crude oil and polymers. Another bearish result came from the US jobless claims, which revealed a higher figure for July and hit the highest level since February. Simultaneously, the US dollar gained strength and the euro/dollar parity retreated to 1.28 from the early week highs of 1.32. The appreciation of the dollar along with the lower stock markets and bearish economic reports reinforced concerns that a slowing recovery will crimp fuel consumption.