NEW YORK ( TheStreet) -- Oil prices were being trampled over fears about slowing demand in China.
Brent crude oil for August delivery was tumbling by $2.29 to $116.04 a barrel and the August West Texas Intermediate light sweet crude oil contract was falling $1.14 to $95.06. The U.S. dollar was gaining 1% to $75.91.
China's June imports grew by a mere 19.3% from a year ago, slowing from May's growth of 28.4%
"Part of the decline may be explained by seasonal factors and widespread power shortages, but we have to suspect that the government's tightening macro stance must be having some impact as well," said MF Global analyst Ed Meir.Crude oil imports fell to an eight month low. Last week, China lifted a key interest rate for a third time in 2011 in a move to fight overheating. Over the weekend, the country said the inflation rate rose to a much greater than predicted three-year high of 6.4% in June. Separately, an MF Global report says that China has failed to sell all of its three-year local government debt on offer. China sold CNY23.9 billion ($3.69 billion) in debt at 3.93% vs. the planned sale of CNY 25 billion ($3.87 billion) in debt. "Today's selloff is courtesy of news out of China that oil imports shrank in June to an eight-month low, combined with further European sovereign debt concerns; next stop is Italy and Spain, as both see the price of their debt spreads reach record levels as confidence in them evaporates," said Summit Energy analyst Matt Smith. In the U.S., the budget debate has been progressing slowly, as a deal to slash $4 trillion over 10 years slips further out of reach and a $2.4 trillion in deficit reduction looks more likely. President Obama is scheduled to hold press conference to address the matter. "We suspect that progress will not come as quickly or as easily as we were led to believe, in which case the drawn-out negotiations should get the markets more nervous as various deadlines approach," said Meir. Oil stocks were trading in the red. Marathon Oil (MRO - Get Report) was falling 1.9% to $32.05, Chevron (CVX - Get Report) was falling 1.7% to $104.15, Texas Instruments (TXN - Get Report) was down 0.2% to $32.82 and Hess (HES - Get Report) was tumbling 3% to $72.48. "Economic data is decisively anemic and it has not supported a solid recovery under way in two or three months," said Cameron Hanover analysts. August natural gas futures were popping 2.6% to $4.316 per million British thermal units Monday on expectations of greater air conditioning needs and hotter weather. Cameron Hanover analysts say it's expected to get "brutally hot" across the eastern half of the country by Wednesday, but should cool down by Thursday or Friday. Natural gas stocks were slumping along with the broader indices as the markets became risk averse over global economic concerns. Kinder Morgan Energy Partners (KMP) was falling 0.8% to $73.28, Williams Partners L.P. (WPZ - Get Report) was slumping 1% to $54.51 and Duncan Energy Partners (DEP) was falling by 1.2% to $42.96. -- Written by Andrea Tse in New York.
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