Impact China economy on crude oil prices : The U.S. oil benchmark bounced modestly off a nearly 6 1/2 year low to finish Friday’s session in positive territory, but it posted a seventh consecutive weekly loss on escalating concerns about demand from China and continued worries about a domestic and global supply glut.
West Texas Intermediate crude futures for September delivery CLU5, -0.12% on Nymex rose 27 cents, or 0.6%, to settle at $42.50 a barrel after earlier falling as low as $41.35, a level seen last in March 2009. Oil posted a weekly drop of 3.1%.
“Though oil has bounced off the low, it remains near this year’s earlier base of about $42 and thus on course to potentially fall to $40 a barrel next,” said Fawad Razaqzada, technical analyst at Forex.com, in a note. “That being said though, the correction potential is now high as ‘bargain hunters’ try to buy ‘cheap’ oil and the sellers take profit ahead of the weekend.”
October Brent crude on London’s ICE Futures exchange LCOV5, -1.79% fell 44 cents, or 0.9%, to end at $49.19 a barrel.
Oil bulls did receive a modicum of positive news: the U.S. Commerce Department has quietly informed members of Congress that it intends to allow oil companies to sell U.S. crude to Mexico, in a further weakening of the country’s four-decade ban on crude-oil exports.
other factors continue to weigh on the market.
On the supply side, oil-services firm Baker Hughes reported the number of U.S. oil rigs rose for a fourth straight week, moving up 2 to 672. The number of rigs remains down more than 900 from a year ago, but the recent rise and the lack of a more pronounced fall in U.S. oil production has helped keep pressure on crude, analysts said.
China’s oil-import demand has been robust, but a stream of negative economic data points to slowing industrial and economic growth. Investors are worried that Chinese demand for oil will drop following the devaluation of the currency earlier this week, since a weakened yuan makes imports more expensive.
While concerns about China’s economy have triggered the latest leg of weakness in oil prices, the primary factor pressuring the market is a glut of supplies. Earlier in the week, U.S. crude-oil stockpiles declined for the third straight week, though the extent of the drop was less than the market had expected.
there were concerns U.S. oil inventories would start increasing again because of the closure of a refinery that produces 240,000 barrels a day. There have been few signs of oil supplies easing, with large producers such as Saudi Arabia, Iraq or U.S. shale-oil companies refusing to cut output.
“The lowest crude prices in six years might not be enough to put the brakes on the U.S. supply growth,” U.S. shale players are actively cutting cost and some players are profitable at less than $30 per barrel.”
West Texas Intermediate crude futures for September delivery CLU5, -0.12% on Nymex rose 27 cents, or 0.6%, to settle at $42.50 a barrel after earlier falling as low as $41.35, a level seen last in March 2009. Oil posted a weekly drop of 3.1%.
“Though oil has bounced off the low, it remains near this year’s earlier base of about $42 and thus on course to potentially fall to $40 a barrel next,” said Fawad Razaqzada, technical analyst at Forex.com, in a note. “That being said though, the correction potential is now high as ‘bargain hunters’ try to buy ‘cheap’ oil and the sellers take profit ahead of the weekend.”
October Brent crude on London’s ICE Futures exchange LCOV5, -1.79% fell 44 cents, or 0.9%, to end at $49.19 a barrel.
Oil bulls did receive a modicum of positive news: the U.S. Commerce Department has quietly informed members of Congress that it intends to allow oil companies to sell U.S. crude to Mexico, in a further weakening of the country’s four-decade ban on crude-oil exports.
other factors continue to weigh on the market.
On the supply side, oil-services firm Baker Hughes reported the number of U.S. oil rigs rose for a fourth straight week, moving up 2 to 672. The number of rigs remains down more than 900 from a year ago, but the recent rise and the lack of a more pronounced fall in U.S. oil production has helped keep pressure on crude, analysts said.
China’s oil-import demand has been robust, but a stream of negative economic data points to slowing industrial and economic growth. Investors are worried that Chinese demand for oil will drop following the devaluation of the currency earlier this week, since a weakened yuan makes imports more expensive.
While concerns about China’s economy have triggered the latest leg of weakness in oil prices, the primary factor pressuring the market is a glut of supplies. Earlier in the week, U.S. crude-oil stockpiles declined for the third straight week, though the extent of the drop was less than the market had expected.
there were concerns U.S. oil inventories would start increasing again because of the closure of a refinery that produces 240,000 barrels a day. There have been few signs of oil supplies easing, with large producers such as Saudi Arabia, Iraq or U.S. shale-oil companies refusing to cut output.
“The lowest crude prices in six years might not be enough to put the brakes on the U.S. supply growth,” U.S. shale players are actively cutting cost and some players are profitable at less than $30 per barrel.”
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