Crude Oil Collapses To End Below $39 Amid China Crisis

(RTTNews) - U.S. crude oil plunged to end at fresh 6-1/2-year lows on Monday, as global equity markets were caught in a turmoil with a massive sell-off after another collapse in Chinese equities amid mounting concerns over the global economy.

The rout in crude oil prices continued amid anxiety over stocks and the health of the global economy. Markets across the globe were under pressure following the sharp sell-off in the Chinese stock market, with weakness in commodities has also weighing on resource-heavy markets.

Chinese demand is also a concern, with the economic superpower showing signs that its rapid growth is fading. China's benchmark Shanghai Composite index plunged 8.49 percent to finish at a five-month low.

The crisis began earlier this month, when China devalued its currency, yuan, by the most in two decades to cushion its exports.

Prices have plunged about 60 percent from a year ago, having been under pressure for last several months on oversupply concerns. However, in addition to oversupply concerns, the current turmoil is widely linked to fears of a more than anticipated slowdown in the Chinese economy.

Despite all apprehensions, the OPEC refuses to cut supplies to ease the oversupplied markets.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, plummeted $2.21 or 5.5 percent, to settle at $38.24 a barrel on the New York Mercantile Exchange Monday. The last time crude prices settled below $39 was in February 2009.

Crude prices for October delivery scaled a high of $40.47 a barrel intraday and a low of $37.75.

On Thursday, crude oil futures for October delivery plummeted $0.87 or 2.1 percent, to close at $40.45 a barrel, as global equity markets declined sharply and with mounting evidence that China is going through a rough economic patch.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 93.76 on Monday, down from its previous close of 94.78 in late North American trade on Monday. The dollar scaled a high of 94.96 intraday and a low of 92.62.

The euro trended higher against the dollar at $1.1565 on Monday, as compared to its previous close of $1.1389 in North American trade late Friday. The euro scaled a high of $1.1626 intraday and a low of $1.1371.

In economic news, the leading index for Japan, which measures the future economic activity, rose less than initially estimated in June, final figures from the Cabinet Office showed Monday. The index was revised downward to 106.5 in June from a preliminary estimate of 107.2. In May, the score was 106.0. The latest reading is the highest since March 2014, when it marked the same 106.5.

The U.K. economy is expected to grow at a faster pace this year as household spending and productivity growth pick up. The Confederation of British Industry forecast 2.6 percent growth this year, up from the prior estimate of 2.4 percent. Similarly, the outlook for 2016 was raised to 2.8 percent from 2.5 percent.