Oil price slumps to lowest level in more than 6 years

“Devaluation of the yuan means a stronger U.S. dollar and that’s likely to weigh on commodity prices“, Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone.

The falling oil price will put further pressure on the Canadian economy, which is struggling to throw off the recessionary effects of low oil.

US benchmark West Texas Intermediate for delivery in September gained US$1.09 at US$44.96 a barrel on the New York Mercantile Exchange.

The bank lowered its average 2015 forecast for Brent crude and US oil by $16 per barrel and by $19 for 2016. Futures of ultra low sulphur diesel rose more than 3pc, rebounding from last week’s six-year lows.

The decision by the Organisation of the Petroleum Exporting Countries (Opec) to maintain its output level at around 30 million barrels a day despite sagging demand is also seen as a reason for the abundant supplies.

Commenting on the continuing price slide, Capital Economics noted: “The falls mainly reflect positive supply-side developments and are also small compared to those that have gone before”. Many had speculated the cartel was planning an emergency meeting to respond to low oil prices.

Crude prices got support from equity market. Saudi Arabia and other OPEC nations kept pumping crude at high levels and Iranian oil could soon return to the market after being kept off by sanctions.

In Monday’s session, gasoline futures jumped about 3 percent, heading for its largest daily gain in a month, after BP Plc’s 240,000 barrel per day crude distillation unit at its Whiting, Indiana, refinery, was shut by a malfunction on Saturday, sources familiar with operations at the plant said.

The U.S. Energy Information Administration on Tuesday lowered its price forecast for both U.S. and global spot prices by about 10%.

Market power is shifting towards big consumers, with oil output at record highs and global demand slowing.

On Monday, the gasoline “crack”, or refining margin, hit a one-week high above $US26 a barrel. The Wall Street Journal’s dollar index recently traded up 0.4% on the day.

“Economic weakness has set the tone”, Matt Smith, director of commodity research at ClipperData, a New York-based energy database, told Reuters. Natural gas rose 0.2 cents to close at $2.844 per 1,000 cubic feet.

Benoît Faucon contributed to this article.