Oil prices slide fur­ther in Asia

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Oil prices slipped fur­ther in Asia Tues­day, weighed down by a strength­en­ing dol­lar as con­cerns about weak­en­ing de­mand in China added to ex­pec­ta­tions a global over­sup­ply will last for years.

US bench­mark West Texas In­ter­me­di­ate for Septem­ber de­liv­ery was down seven cents to $41.80 in late-morn­ing trade. WTI has lost more than 30 per­cent in the past two months, bring­ing it to the low­est level since March 2009. Brent crude for Oc­to­ber gave up 13 cents to $48.61.

Oil has led a slump in energy com­mod­ity prices in the past month "due to con­cerns about fall­ing de­mand from China and ro­bust global sup­ply, es­pe­cially in the US," re­search house Cap­i­tal Eco­nom­ics said.

Strong out­put from US shale oil pro­duc­ers and the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries have out­paced the growth in de­mand, lead­ing to an over­sup­ply which has de­pressed prices. BMI Re­search, a sub­sidiary of fi­nan­cial in­for­ma­tion provider Fitch Group, pre­dicted the glut will per­sist un­til 2018.

"The re­turn of Ira­nian oil to mar­ket, cou­pled with strong pro­ject pipe­lines in North Amer­ica, the Mid­dle East, west Africa and Kaza­khstan, will see global sup­ply ex­pan­sion out­strip the growth in global con­sump­tion years," it said.

Pun­ish­ing Western sanc­tions that have re­stricted Iran s oil ex­ports for years are ex­pected to be lifted once it is ver­i­fied that Tehran is com­ply­ing with a deal to curb its nu­clear am­bi­tions. An­a­lysts say the re­turn of Ira­nian oil will add to the cur­rent ex­cess, fur­ther damp­en­ing prices.

An­tic­i­pa­tion that Fed­eral Re­serve will raise in­ter­est rates as early as Septem­ber and China s sur­prise de­val­u­a­tion of the yuan have also boosted the US cur­rency, mak­ing dol­lar-priced oil more ex­pen­sive in the global mar­ket. This tends to dis­cour­age de­mand and leads to lower prices.

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