Oil Falls to Lowest Since 2003 as Yuan Drop Shows China Turmoil

‘While the oil market remains focused on the potential for Opec supply to rise further, the geopolitical premium in oil prices is likely to be small’.

All of that is good for U.S. consumers, he said, noting that the U.S. Energy Information Administration says the average U.S. household saved almost $700 on cheaper gasoline a year ago, compared with 2014.

The US Department of Energy s weekly report Wednesday showed a sharp drop in US commercial crude inventories, by 5.1 million barrels to 482.3 million barrels in the week ending January 1. “Aramco’s aim is to achieve the best prices without going in at a level that would make their crude less competitive against other grades”.

China let the yuan slip on Thursday, sending regional currencies and stock markets tumbling as the offshore yuan CNH=D3 fell to a fresh record low since trading started in 2010.

“The petroleum product inventory build has led to pressure on crude oil prices because it impacts refining margins and they (refiners) might ultimately cut their demand for crude oil”, Lipow said.

American benchmark, West Texas Intermediate, is also having a terrible day – it is down by almost 3%, to below $35 a barrel.

USA crude futures plunged around 5%to a low of $32.10 per barrel, the lowest since late 2003, before bouncing slightly to $32.97.

As of 14:53 front month Brent crude futures were 4.65% lower to $34.80 per barrel in ICE trading.

“The Chinese economy actually contracted in December and that’s adding fire to fears of a more rapid slowdown in the world’s second biggest economy”, Mr McCarthy said.

Shortly after midday, Brent prices stood at US$33.11 a barrel, down US$1.12 from Wednesday’s closing level.

Even a gradual increase in its exports would come at a time of a global glut, with producers around the world pumping hundreds of thousands of barrels of crude every day in excess of demand.

Crude oil prices fell to new lows on Thursday below 2004 levels, due to the depreciation of the Chinese yuan, rising conflict between Saudi Arabia and Iran and a USA stockpile rise.

The oil market largely shrugged off rising political tensions in the Middle East. On Tuesday, Kuwait also recalled its ambassador to Iran following attacks on Saudi missions by Iranian protesters, state news agency Kuna reported.