Oil prices slide further in Asia on China woes
Oil prices slipped further in Asia Tuesday, weighed down by a strengthening dollar as concerns about weakening demand in mainland China added to expectations a global oversupply will last for years.
U.S. benchmark West Texas Intermediate (WTI) for September delivery was down 12 cents to US$41.75 in afternoon trade. WTI has lost more than 30 percent in the past two months, bringing it to the lowest since March 2009.
Brent crude for October gave up 11 cents to US$48.63.
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 U. S.,” research house Capital Economics said.
Strong output from U.S. shale oil producers and the Organization of the Petroleum Exporting
level Countries cartel has outpaced the growth in demand, leading to an oversupply that has depressed prices.
BMI Research, a subsidiary of financial information provider Fitch Group, predicted the glut will persist until 2018.
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 the Federal Reserve will raise interest rates as early as September and mainland China’s surprise devaluation of the yuan have also boosted the U.S. currency, making U.S.dollar-priced oil more expensive in the global market.
This tends to discourage demand and leads to lower prices.