BEIJING: The oil prices in the international market Friday surged by more than two per cent after hike in China shares.
Oil prices plunged to 12-year lows in the previous session after China allowed its yuan currency to slip, sending stock markets tumbling globally. Beijing then suspended equities trading as the sharp falls triggered the circuit-breaking mechanism for a second time since its introduction this week.
“As Chinese equity markets started to recover today, the oil prices rallied much altogether,” said Kang Yoo-jin, commodities analyst at NH Investment and Securities based in Seoul.
Chinese stocks were boosted as the yuan currency firmed in early trade after the People’s Bank of China strengthened its official rate for the first time in nine trading days.
Tracking this, Brent rose 75 cents to $34.50 a barrel by 0743 GMT, near an intraday high of $34.72. It was more than $2 away from Thursday’s $32.16, a level last seen in 2004. US West Texas Intermediate (WTI) was up 68 cents at $33.95 a barrel. In the prior session, it hit its lowest since late 2003 at $32.10.
While oil prices have bounced off lows, market participants remain unwilling to call an end to the slump. This week’s turmoil in Chinese markets has raised the risk of slowing demand from the world’s No. 2 oil consumer, threatening to prolong an over year-long crude supply overhang.
OPEC’s smallest member Ecuador, which has increased debt and reduced investments due to the oil price plunge, said it would continue to press for production cuts at the cartel’s next meeting scheduled for June.
