Comments
US crude oil prices fell back below $42 a barrel to prices not seen since March 2009 on Friday, as rising US stockpiles added to concerns about oversupply and a demand slump due to slowing economies in Asia.
Oil prices initially rose in early Asian trade following a sharp and sudden fall below $42, and after briefly recovering dipped back below that level around 0330 GMT to be nearly a third below their 2015-highs from last May.
Prices tumbled more than 3 per cent on Thursday as data showing a big rise in key US stockpiles intensified concerns over a growing global glut.
“Downward momentum (is) still strong,’’ Singapore-based brokerage Phillip Futures said in a note.
US crude was trading down 0.6 per cent at $41.98, above a low $41.35. Brent futures were trading at $49.22 a barrel, flat from their last settlement and still some way off from their 2015-low of $45.19.
On the demand side, China’s slowing economy and weakening currency could lead to a slump in consumption.
“WTI prices fell sharply to a six-year low amid rising concerns around China’s economic slowdown,’’ ANZ bank said on Friday, adding that further price falls were likely.
“The lowest crude prices in six years might not be enough to put the brakes on the US supply growth. US shale players are actively cutting cost and some players are profitable at less than $30 per barrel.’’
China’s crude oil demand
Although China’s crude oil demand has so far remained strong as authorities take advantage of cheap oil to build up strategic reserves and consumers kept spending despite the slowing economy, there are signs of weakening, with the devaluation of the yuan potentially denting fuel imports.
China’s implied oil demand fell in July from the previous month amid a continuing drop in the nation’s vehicle.
Analysts at JPMorgan estimate around $235 billion of private capital left China between the third quarter of 2014 and the end of the second quarter this year.
China’s slump may be spreading across Asia. Japanese economy likely shrank in April-June as exports slumped and consumers cut back on spending, a Reuters poll showed.
China’s economic slowdown and its impact on its trade-reliant Asian neighbours have also heightened the chance that any rebound in growth in July-September will be modest, analysts said
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.