Oil prices slump amid fears of US rate hike and Chinese slowdown

China reported its weakest industrial production data in nearly six years

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Oil prices fell to a two-year low on fears of a slowdown in China and increased expectations of an earlier interest rate hike in the United States.

Brent crude for delivery in October fell 40 cents to $96.70 a barrel today, the lowest since July 2012. A barrel of US crude oil is trading at $91.27, close to a 16-month low.

China reported on Saturday that industrial production in the world’s second-biggest economy grew at 6.9 per cent year on year in August, the weakest in nearly six years and well short of analysts’ expectations of an 8.8 per cent expansion.

“Economic growth in China is one of the key drivers of world growth and generally of oil demand,” said CMC Markets analyst Ric Spooner.

The oil price was also depressed by a strengthening of the US dollar.

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Analysts expect chairman Janet Yellen to sound a hawkish note after this week’s meeting of the US Federal Reserve, possibly by omitting the central bank’s commitment to keep rates low for “a considerable time”.

The dollar close to 13-month highs against a basket of other currencies.