Oil Bounces Back Despite China Rout
Published By : 18 Aug 2015 | Published By : QYRESEARCH
Oil prices on Tuesday rebounded as profit takers and bargain buyers prevailed over the pressure from economic concerns in China and the global glut that has recently added to the fall in oil prices.
West Texas Intermediate crude reached a record six year low on Monday and analysts say that this led numerous bearish traders to be skeptical about selling more futures. Crude has had such as massive and persistent fall – plummeting from 2014’s highs by about 60 per cent – that many traders are likely to use the chance of a new low to purchase contracts in order to cash out winning bets. This, analysts said, can temporarily lead to a rise in prices.
Sweet light crude meant for delivery in September rose 1.8 per cent or 75 cents to reach US$ 42.62 per barrel on the New York Mercantile Exchange. The global benchmark Brent crude rose 0.1 per cent or 7 cents to settle at US$ 48.81 per barrel on ICE Futures Europe.
Jim Ritterbusch, president of Ritterbusch and Associates the energy advisory firm, told clients in a note that the downside price momentum across the oil industry seems to be caving in on account of the market’s ability to recognize the overnight plunge of Chinese equities with limited selling.
China brought Asian markets lower after the Shanghai Composite Index dropped to 6.2 per cent. The central bank in China put in the highest amount of cash in the country’s financial system on a single day over a period of nearly 19 months. This is an indication of Beijing's rising concerns over capital outflow after the recent weakening of the yuan. Oil traders have now been emphasizing on how crude demand could be impacted by weakening economic growth in the second largest oil consumer of the world.