Oil prices slide to fresh lows in Asian trade
Oil prices extended losses in Asia on Wednesday as dealers worried about mainland China’s economy following its surprise currency devaluation, while oversupply concerns also added to downward pressure, analysts said.
U.S. benchmark West Texas Intermediate (WTI) for September delivery fell nine U.S. cents to US$42.99 while Brent crude for September slipped 26 U.S. cents to US$48.92 in afternoon trade.
WTI on Tuesday sank
its lowest close since March 2009, while Brent also fell in London, after mainland China’s central bank moved to devalue its currency by nearly two percent against the U.S. dollar.
Beijing’s move pushed up the greenback, which strengthened further against Asian currencies on Wednesday, hurting dollardenominated commodity prices by making them more expensive for international buyers.
Daniel Ang, an investment analyst at Phillip Futures in Singapore said prices were also under pressure after the Organization of the Petroleum Exporting Countries (OPEC) said output in July rose by 100,700 barrels per day from the previous month to 31.5 million barrels per day.
The producer cartel’s refusal to cut its output level despite sagging demand is seen as a reason for a prolonged global oversupply, which has seen prices fall to almost a third of their mid-2014 peak.
Analysts have said the move is an attempt by the cartel’s kingpin Saudi Arabia to defend its market share as it fends off competition from U.S. shale oil.