Oil prices rise amid higher China imports

A global oil oversupply since last summer, led by stubbornly strong U.S. shale crude output and record production by Middle East producers, has driven prices down from June 2014 highs above $100 a barrel.

The comments weakened the dollar, which encourages buying in dollar-priced commodities as it makes them cheaper to holders of other currencies.

We at Bidness Etc believe that Chinese demand pressures, along with Iran ramping up its production rate to pre-sanction levels, will keep the prices depressed in the foreseeable future.

Brent futures (LCOc1) were down 26 cents at $48.92, more than 25 percent below their last peak in May.

Crude oil prices jumped as much as 3pc yeserday after a rally in US petrol and diesel due to a refinery outage helped crude futures advance from multi-month lows earlier in the session.

Drillers in the US, the world’s biggest oil consumer, have added rigs to fields for the fifth weekly gain in six, Bakers Hughes said on its website.

The slowdown in China and the currency devaluation suggest to traders that crude demand in China will be reduced, he added.

JP Morgan said near-term downside risks to oil prices could come from reduced crude demand in Asia, deteriorating Atlantic Basin crude prospects and potential inventory liquidation by the National Iranian Oil Company.

OPEC, whose members are responsible for 40 percent of the world’s oil supply, has refused to lower output in response to falling prices and raised it in July to 31.5 million barrels a day, the highest level since May 2012, Market Watch reported.

China’s yuan hit a four-year low on Wednesday, slipping further a day after authorities devalued it to support its struggling economy. “If you think about where we were trading last year, you’re talking about a 50 percent reduction in crude, and the currency impact is nowhere near that”.

Oil prices have edged up from six-year lows as US oil supplies declined and the US dollar retreated. “It’s bad news for oil because China will have to pay more for it”, Hamza Khan, senior commodities analyst at ING Bank, said. India had a trade deficit of $50 billion with China previous year.