Oil prices slide fur­ther in Asia on China woes

The China Post - - BUSINESS INDEX & -

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.

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