• 4 minutes Why Trump will win the wall fight
  • 9 minutes Climate Change: A Summer of Storms and Smog Is Coming
  • 12 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 16 minutes Washington Eyes Crackdown On OPEC
  • 14 hours Ayn Rand Was Right
  • 1 day is climate change a hoax? $2 Trillion/year worth of programs intended to be handed out by politicians and bureaucrats?
  • 7 hours Oil imports by countries
  • 12 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 13 hours Solar and Wind Will Not "Save" the Climate
  • 12 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
  • 5 hours North Korea's Kim To Travel To Vietnam By Train, Summit At Government Guesthouse
  • 16 hours Sanctions or Support: Despite Sanctions, Iran's Oil Exports Rise In Early 2019
  • 5 hours America’s Shale Boom Keeps Rolling Even as Wildcatters Save Cash
  • 7 hours AI Will Eliminate Call Center Jobs
  • 11 hours NZ Oil, Gas Ban Could Cost $30 Bln
  • 52 mins US-backed coup in Venezuela not so smooth

Breaking News:

TransCanada Restarts Keystone

Alt Text

Oil Majors Double Down On Battery Investment

Oil majors are increasingly interested…

Alt Text

Permian Production To Break 4 Million Bpd In March

Permian oil production is set…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

China Provides Another Threat To Oil Prices

First it was a stock market meltdown, now it’s a weakening currency.

China continues to present significant risks to the oil market. On August 11, China decided to devalue its currency in an effort to keep its export-driven economy competitive. The yuan fell 1.9 percent on Tuesday, the second largest single-day decline in over 20 years. The yuan dropped by another 1 percent on Wednesday. Related: Bullish Bets On Oil Go Sour

The currency move followed shocking data that revealed that China’s exports plummeted by 8 percent in July. A depreciation of the currency of 3 percent will provide a jolt to Chinese exporters, but will slam companies and countries that export to China.

China insisted that the devaluation was a “one-off” event. “Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan,” the People’s Bank of China said in a statement. Related: When Will Oil Prices Turn Around?

But it also appears to be a move to allow the currency to float more freely according to market principles, something that the IMF has welcomed. “Greater exchange rate flexibility is important for China as it strives to give market-forces a decisive role in the economy and is rapidly integrating into global financial markets,” the IMF said. Although there is still quite a ways to go, the move is also seen as a prerequisite for the yuan to achieve reserve-currency status.

For oil, the move has raised concerns that oil demand will take a hit. China is the world’s largest importer of crude, and a devalued currency will make oil more expensive. On August 11, oil prices dropped to fresh six-year lows, surpassing oil’s low point from earlier this year. But with China’s economy – once the engine of global growth – suddenly looking fragile, it would be difficult to argue with any certainty that oil has hit a bottom. Related: The Oil Price: How Low Is Low?

China’s economic growth was already slowing, but its GDP growth rate could dip below 7 percent this year, and drop to 6.5 percent in 2016. The EIA estimates that WTI will average just $49 per barrel in 2015, and $54 next year, an acknowledgement that the recent downturn in oil prices may last longer than expected.

The news came on top of new data showing that OPEC is significantly exceeding its stated quota of 30 million barrels per day (mb/d). According to OPEC, the group is pumping more than 31.5 mb/d, with large production gains achieved from Iraq, Iran, and Angola.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News