Oil Recovers From Six-Year Low Dollar Slips After Yuan Move
Oil recovered from the lowest close in six years as Chinas currency devaluation helped weaken the dollar, bolstering crudes appeal to investors. Futures rose as much as 1.8 percent in New York. Chinas decision to devalue the yuan a second day, while fanning concern that its economy is faltering, may eventually stoke the nations demand for oil, according to Commerzbank AG. The International Energy Agency said global demand growth will be the strongest in five years in 2015 while a supply glut will persist. The dollar fell to its weakest level in a month against the euro. Crude has swung between gains and losses this week on mixed signals from China, the worlds second-biggest oil consumer. The countrys record-high imports in July boosted speculation that sustained buying may alleviate a global glut. If the Chinese economy is stimulated as expected by credit easing and currency depreciation, then its ultimately good for oil and commodity demand, Eugen Weinberg, head of commodities research at Commerzbank, said by e-mail. A weaker U.S. dollar is part of the overall equation. West Texas Intermediate for September delivery rose as much as 79 cents to $43.87 a barrel on the New York Mercantile Exchange and was at $43.47 at 1:19 p.m. London time. The contract slid $1.88 to $43.08 on Tuesday, the lowest close since March 2009. Prices have decreased 18 percent this year. Oil Volatility Brent for September settlement was 47 cents higher at $49.65 a barrel on the London-based ICE Futures Europe exchange. The contract lost $1.23 to $49.18 on Tuesday. The European benchmark crude traded at a premium of $6.22 to WTI. Global demand in 2015 will grow at more than twice last years pace as low prices spur consumption in the U.S. and economies recover, the IEA said. World oil use will expand by 1.6 million barrels a day to average 94.2 million barrels a day. Nevertheless the oil glut will last through next year, according to the agency. The Chicago Board Options Exchange Crude Oil Volatility Index closed at 42.16 on Tuesday. The gauge of hedging costs on the U.S. Oil Fund, the largest exchange-traded fund tracking WTI futures, rose 6.1 percent last week. Oil has dropped about 30 percent since this years peak closing price in June amid speculation the global surplus that drove prices into a bear market will persist. While U.S. crude stockpiles probably declined a third week through Aug. 7, supplies remain more than 90 million barrels above the five-year average for this time of year. The Organization of Petroleum Exporting Countries raised output by 100,700 barrels a day to 31.5 million in July, the group said in its monthly market report, citing external sources. Saudi Arabia told OPEC it cut production by the most in almost a year. Iran increased output by 32,300 barrels a day to 2.86 million a day, the highest since June 2012. The dollar slid 1.1 percent to $1.1163 per euro as of 1:28 p.m. London time, after touching $1.1178, the weakest since July 13.