NEW YORK, Sept. 22 (UPI) — Continued government spending on fossil fuels added to fears of oversupply, pushing crude oil prices deep into negative territory in early Tuesday trading.
Brent crude oil prices reversed course from Monday’s rally to lose 2.2 percent at the start of trading in New York to sell for $47.84 per barrel. West Texas Intermediate, the U.S. benchmark for crude oil prices, was off nearly 3 percent from the previous close to start trading at $45.30 per barrel.
Crude oil prices are down 50 percent from last year in part because of steady production levels from members of the Organization of Petroleum Exporting Countries and the increase in output from U.S. shale basins. Weak demand, meanwhile, has been the trend as the European economy struggles to emerge from recession and Asian economies, notably China, show signs of slowing down.
A series of summer crashes on the Shanghai Index prompted Beijing to revalue the nation’s currency, adjust interest rates and inject cash into the market to slow the decline. China’s central bank pumped in another $7.9 billion into the markets Tuesday.
Angel Gurria, secretary-general of the Organization of Economic Development and Cooperation, said governments are still spending lavishly on fossil fuels.
“Governments are spending almost twice as much money supporting fossil fuels as is needed to meet the climate-finance objectives set by the international community, which call for mobilizing $100 billion a year by 2020,” he said. “We must change the course.”
Demand should remain tepid, however, despite the spending. OECD Chief Economist Catherine Mann said last week the global prospects for economic growth “have weakened slightly.”
An IMF report from early September said global economic growth “remains moderate and uneven.”
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