China's economic slowdown: Commodities plunge to 16 year low as China fears push oil prices down further

Clara Guibourg
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US oil was trading below $40 a barrel for the first time in six years (Source: Getty)

Commodity companies’ shares have been hit hard by crashing oil prices and “Black Monday” market fears that China’s slowdown will worsen a global oversupply of raw materials.

Bloomberg’s commodity index, a basket tracking 22 different raw materials, tumbled to 86.3542 today, its lowest level since 1999, as commodity prices continue to slump amid a global glut.

Read more: FTSE edges towards 6,000 after China shock

Today’s dramatic fall was led by another sharp drop in the price of oil, with US benchmark West Texas Intermediate (WTI) trading below $40 a barrel for the first time in six years.

The low price of oil is forecast to last until the end of 2016, according to the International Energy Agency.

Raw materials have tumbled over the year, amid growing concerns that a drop in buying in the world’s second-largest economy will worsen the oversupply of commodities, pushing demand lower.

The worries over China’s economy have sent investors running for safer havens like gold instead.

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