China seems to be making waves in the oil worldwide market as it’s markets pushes crude closer to $30 a barrel causing the U.S oil future in NY to experience its lowest in over a decade.
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Oil prices plunged to 12-year lows in the previous session after China allowed its yuan currency to slip, sending stock markets tumbling globally.
The global benchmark for Brent crude fell by as much as 5pc, or $2 a barrel to £32.16, the lowest since April 2004.
Companies and governments that rely heavily on oil revenues have been suffering as a result.
US crude futures dropped more than 5 per cent to a low of $32.10 per barrel, the lowest since late 2003, before bouncing slightly to $32.97.
World oil prices collapsed today to the lowest point in 12 years, pummelled by fresh China-driven markets turmoil and the chronic supply glut.
A number of other factors are in play which are compounding oils oversupply problem, with Saudi Arabia continuing to push production and the Organization of the Petroleum Exporting Countries (OPEC) yet to agree production quotas.
Huge oversupply and near-record outputs have continued to drag on oil prices, which are now 70% lower in value than when the downturn began in June 2014. By early afternoon, prices had recovered to about $33.5 per barrel.
At the same time, demand is slowing, especially in Asia where the biggest economy and energy consumer, China, is seeing the slowest economic growth in a generation.
Oil prices rose more than two per cent on Friday following China’s shares going higher after Beijing deactivated a circuit breaker mechanism that was blamed for aggravating equity market crashes.
“Data suggest gasoline and distillate fuel stockpiles increased 10.6 million barrels and 6.3 million barrels, respectively, last week”.
“Oil remains under pressure amid concerns about China’s economy”, ANZ said in a note on Friday.
“The sentiment is still extremely negative and short positions are still at excessive levels”, Hans van Cleef, senior energy economist at ABN Amro, told the Reuters Global Oil Forum.
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“I’ll say it’s oversold on a short-term basis, though I am an oil bear”, said Tariq Zahir, who trades mostly longer-dated spreads in WTI for the Long Island, New York-based Tyche Capital Advisors fund.
