Oil Tumbles to Fresh Lows on China Market Turmoil

Brent oil closed at a $4.45 premium to West Texas Intermediate, the U.S. benchmark.

“Recent economic and FX weakness in China and other emerging markets will not tip the global economy into recession”, the bank said, but it added that “we see a meaningful risk that markets are over-interpreting the collapse of oil and commodity prices as a negative growth signal”.

The national average retail gasoline price in the U.S. fell to $2.595 a gallon Monday, the lowest price for this time of year since 2004, according to AAA.

“What’s more, lower prices now should boost global economic growth and demand as well as curtailing alternative sources of production, not least US shale, which should lead to higher prices in the future”. And he says he expects the current market turmoil to prompt the U.S Federal Reserve to push back an interest rate hike that had been expected in September, weakening the dollar. In Saudi Arabia, where the government is dependent on oil revenues to provide basic services, officials have expressed reluctance to cut the flow of crude.

October crude CLc1 was down $2.21 or 5.5 percent at $38.24, the lowest since February 2009. U.S.

Shayne Heffernan Funds Manager at HEFFX holds a Ph.D.in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. The OPEC production of oil has averaged 31.5 million barrels a day in July marking a three-year high.

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 China, the world’s top user of industrial metals and energy. Exxon Mobil Corp., the largest U.S energy producer, fell as much as 7.7 per cent to US$66.55 a share, the lowest since October 2010.

That has raised fears that oil traders will demand still lower prices to offset rising storage costs and that crude that can’t be stored will be tossed onto an already glutted market. Companies that primarily drill for oil onshore in the U.S., such as Continental Resources, have suffered even steeper declines.

Looking ahead, some analysts believe the market is looking at $35 a barrel as the next price target for WTI.

Brent was up 68 cents at $43.37 a barrel by 12:07 p.m. EDT (1607 GMT), after hitting $42.23 on Monday, its lowest since March 2009.