Published: Fri, August 09, 2019
Finance | By Loren Pratt

Oil prices jump due to firm yuan, potentially more Opec cuts

Oil prices jump due to firm yuan, potentially more Opec cuts

West Texas Intermediate oil for September delivery advanced $1.45 to settle at $52.54 a barrel on the New York Mercantile Exchange.

Oil prices have still lost more than 20% from peaks reached in April, putting them in bear territory.

China's yuan strengthened against the dollar and its exports unexpectedly again began growing in July on improved global demand despite US trade pressure, Reuters reported.

Brent has plunged more than 12% after U.S. President Donald Trump said last week that he would slap a 10% tariff on a further $300 billion in Chinese imports from september 1, sending global equity markets into a tailspin.

Both crude contracts fell to their lowest mark since January on Wednesday after the U.S. Energy Information Administration said U.S. crude stockpiles rose last week after roughly two months of decline, as imports hit their highest volume since January.

The oil markets extended losses after government data showed that USA crude stockpiles rose unexpectedly last week, increasing 2.4 million barrels, compared with analysts' expectations for a decrease of 2.8 million barrels.

Trump on Tuesday dismissed fears that the trade row with China could be drawn out further.

The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year.

That helped oil rebound from the lowest close since January, after it tumbled along with other risk assets this week on concern that the trade spat between Beijing and Washington will hurt the health of the global economy. His comments failed to prevent shares in Asia from falling for an eighth straight session on Wednesday.

"Market focus in oil has clearly shifted".

Tensions in the Middle East remain high after Iran seized a number of tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil shipments.

After seven weeks of consecutive crude drawdowns, "there was a thought that today's report would turn oil's fortunes around", said John Kilduff, partner at Again Capital LLC in NY.

The 2019 budget, which was signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million bpd (including condensates) with an oil benchmark price of $60 per barrel.

Saudi Energy Minister Khalid al-Falih insisted at OPEC's last meeting in July that the kingdom had already cut "deep enough".

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