Oil Prices Slip to New Lows

Although equities are trading modestly positive, the Chinese stock market plummet in the prior session to start the 2^nd week of 2016 sent oil moving lower in parallel, signaling concerns for the world’s biggest energy user. West Texas Intermediate dropped as low as $30.41 with Brent echoing the slide to $30.42 in early trading, indicating a further downside continuation for both benchmarks. According to the International Energy Agency, consumption in China is estimated to be around 11.30 million barrels a day for 2015. As fears of onshore storage constraints come to fruition with the market dealing with chronic oversupply, the slowdown in global demand and weak economic activity from China might invariably push prices for oil and other commodities even further down. Analysts reported a major contraction in China’s demand for oil, shrinking by -4.90% in November and -2.00% on an annualized basis.

The Spanish economy, the fourth largest economy in the monetary union, is experienced sustained growth at a moderate pace, aided by lower energy prices, improving unemployment and stronger financial conditions.  Spain showed another month of strong gains in November with industrial output topping 4.20% growth on an annualized basis. Last month’s annual growth was revised at 4.10%. The improvement in the economy is helping in the Spanish industry and services to gain in strength. Consumer goods output climbed 4.00% and capital goods production surged to 9.30%. The increase in intermediate goods output came in at 4.30%. Declines were only reported to be from energy down by 2.50%. Analysts are keeping an eye out on the Euro Area’s industrial production data due mid-week as signs show the region continuing to improve amid accommodative monetary policy measures.  The Euro continues to strengthen moderately versus peers, especially the Pound.