Oil Near 12-Year Low as China Volatility Stays in Focus
Oil traded near a 12-year low Jan. 8 as investors focused on volatility in Chinese markets after the country sought to quell losses in equities and stabilize its currency.
Futures were steady, erasing earlier gains after China suspended an equity circuit breaker system, set a higher yuan reference rate and directed state-controlled funds to buy shares.
Oil briefly resumed gains after government data showed U.S. payroll growth surged in December, capping the second-best year for American workers since 1999. Crude slid Jan. 7 to the lowest level since December 2003 on turbulence in the world’s biggest energy consumer.
The turmoil in China is compounding the negative effect of U.S. crude stockpiles, which remain more than 120 million barrels above the five-year average. Analysts from Nomura Holdings Inc. to UBS Group AG predict oil may fall near $30 a barrel while the Organization of Petroleum Exporting Countries has effectively discarded output limits to defend market share amid a global glut.
"Despite the spectacular jobs numbers, oil has a lot going against it on both the supply and demand fronts," John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said by phone. "On the supply side we have the major producers beating up each other as they fight for market share. Worries about China and its neighbors are raising concerns about key demand centers."
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|By Mark Shenk and Angelina Rascouet |
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