US crude oil on Tuesday settled at a six year low after China, the second largest consumer, devaluated its currency. The move raised numerous questions on the country’s demand for more oil. However, a new projection revealed that producers in non OPEC regions were more determined than ever to keep the output high even amidst low prices.
Crude oil in the United States dropped to contract lows. The global benchmark Brent lost almost all gains from Monday’s rally, settling at the highest decline in seven days.
Tariq Zahir, managing member of Tyche Capital Advisors in New York said that it was time to sell all and any rallies. Tariq believes that oil prices are only set to drop further.
The central bank in China made what is called a “one off depreciation” in the yuan of almost 2 per cent following a spate of weak economic information, which led the currency to an almost three year low.
OPEC forecast that oil supplies from non OPEC countries will increase by 90,000 barrels a day this year, an indication that the collapse in crude price was taking a longer time to impact the shale oil industry in North America than was earlier expected.
Crude oil meant for delivery in September contracted by 4.18 per cent or US$ 1.88 to reach US$ 43.08 per barrel, which is the lowest since February 2009.
Front-month global benchmark Brent dropped 2.42 per cent or US$ 1.25 to reach US$ 49.19. This figure nearly erases the gains made in the last session where it rallied its maximum since May.
Crude in the US has dropped 19 per cent on the year, continuing from last year’s drop of 46 per cent. Brent on the other hand, has been down 15 per cent, extending last year’s tumble of 48 per cent.