Oil prices sink to 6 year lows as China devalues yuan, higher Iranian oil production

12-Aug-15

Oil prices sank to a 6 year low, as China devalues yuan and a report of higher Iranian oil production. West Texas Intermediate for September delivery closed at US$43 per barrel on the Nymex, while Brent futures LCOc1 were down 31 cents at $48.87 per barrel, more than a quarter lower from their last peak in May China allowed its currency to fall sharply for a second day, triggering concerns over the country's economic health just as oil production hit multi-year highs, as per Reuters. China's yuan hit a four-year low, slipping further a day after authorities devalued it to support its struggling economy and sparking fears of a global currency war. A lower yuan erodes Chinese purchasing power for dollar-denominated imports like oil, potentially hitting fuel demand Meanwhile, OPEC said that its members continued to boost supplies. According to secondary sources, OPEC produced 31.51 mln bpd in July. This is 1.5 mln bpd more than its 30 mln bpd target. OPEC also raised its forecast of oil supplies from non-member countries in 2015, a sign that crude's price collapse is taking longer than expected to hit U.S. shale drillers and other competing sources, and the group forecast no extra demand for its crude oil this year At the same time, the U.S. Energy Information Administration issued a prediction for lower oil prices for the year. It says U.S. benchmark crude will average US$49.62 a barrel this year, while Brent crude is expected to average US$54.40, down from a previous prediction of US$60.22