Crash in China's stock market leads oil price to drop to lowest in nearly six months

29-Jul-15

Oil prices have fallen to their lowest levels in six months amid a rout in the Chinese stock market. China's benchmark stock index, with a combined market capitalisation of US$4.6 trillion, has lost 10% in the last two days of trade. Additionally, global oil production is rising in a market already oversupplied by some 2 million bpd. Brent sank to US$52.7 - on track for its longest stretch of daily losses since March, when price hovered just dollars away from six-year lows. US crude dropped to US$47 after ending the previous session down 75 cents. Several ups and downs have been seen in oil prices as USA and Saudi Arabia battle for market share of the global energy industry. June 2014 saw crude plunge from US$107 a barrel to as low as US$43.46 in March. Oil then rebounded over US$60 on hopes the supply/demand imbalance had been fixed as producers in USA contracted drilling activities. But they were on the rise once again as American production ramped back up. USA is currently pumping 9.5 mln bpd- a rise of 1 mln barrels from a year ago. Additionally, with the lifting of sanctions, production may also be on the rise in Iran