Commodities recover ground after China rout
Prices of crude oil and most other commodities rebounded in Asia Tuesday but stayed under pressure following a global sell-off sparked by the faltering economy in mainland China, the world’s top user of industrial metals and energy.
U.S. benchmark West Texas Intermediate (WTI) for October delivery was trading at US$38.92 in afternoon Asian trade after closing at US$38.24 a barrel on the New York Mercantile Exchange, its first below-US$40 close since February 2009.
Brent North Sea crude for October, the international bench- mark, was at US$43.31 a barrel after closing at US$42.69 a barrel in London, its lowest level since March 2009.
“There is some stability in crude and commodities in Asian trading after the global rout but I am not holding my breath that it will last,” said Bernard Aw, market strategist at IG Markets in Singapore.
World equity markets have seen some US$5 trillion wiped off their value since mainland China’s surprise devaluation of the yuan on Aug. 11 fuelled fears the world’s second-largest economy is weaker than thought.
falter- ing economy will curb demand for industrial materials that have helped feed its astonishing growth in recent years.
On oil markets, a drop in buying from China, the number-one energy importer, could be catastrophic at a time when international markets are already heavily oversupplied and could soon see resurgent production from Iran after its nuclear deal.
“None of the support for oil are holding strong enough to reverse the current bearish momentum,” said Daniel Ang, investment analyst at Phillip Futures in Singapore.