Oil prices continue to plummet on China concerns and a strong US Dollar

Oil Drilling and Prices

Oil prices fell on Tuesday as investors continued to worry about economic growth in China and the US dollar continued to pick up strength.

Brent crude prices, a global benchmark for oil pricing, fell by 17 cents to $37.05 a barrel while US West Texas Intermediate crude fell by 7 cents to $36.69 a barrel.

Chinese stock markets continued their downward spiral on Monday, losing 7% of their value.

China is the world’s second-largest oil consumer. As production slows in the country, so does the countries need for increased levels of oil.

“Last year we talked about supply and demand even surprised on the upside. But with this news flow from China, demand fears have come back,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

Prices were also hit by a strong US dollar hit a one-month high against a basket of other currencies, weighing on oil prices as it made holding dollar-denominated commodities more expensive.

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Oil prices appeared ready to spike as tensions in the Middle East continued to mount. On Tuesday, Kuwait recalled its ambassador to Iran following attacks on Saudi missions by Iranian protesters. However, oil production in the region remained strong despite tensions.

US industry group American Petroleum Institute is expected to give an indication of US crude inventory levels at 4:30 p.m. ET on Tuesday.

A recent poll from Reuters found that inventory levels over the last week had fallen 500,000 barrels.