Com­modi­ties re­cover ground af­ter China rout

The China Post - - BUSINESS INDEX & -

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.

In­vestors fear


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.

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