CNBC: US crude dips below 2015 closing low on China demand, OPEC outlook
Oil fell on Tuesday on concerns of weaker demand from China after the world's top energy consumer devalued its currency and as OPEC signalled supplies from rivals were proving more resilient than expected to low prices.
China's central bank made a "one-off depreciation" of nearly 2 percent in the yuan after a run of poor economic data, guiding the currency to its lowest point in almost three years.
Front-month Brent futures were down $1.05 at $48.99 a barrel by 10 a.m. EDT (1400 GMT), erasing most of the gains made in oil's biggest daily rally since late May the previous session. U.S. crude fell $1.71 to $43.25 a barrel, below the 2015 closing low of $43.46 reached on March 17.
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"There is still no solid basis for any prolonged price recovery given that the huge oversupply remains firmly in place," Commerzbank said in a note.
A slowdown in China's economy, which is still expected to grow by around 7 percent annually, has been a key driver for the sharp drop in oil prices over the past year along with rising global supplies.
"On the other hand, if this devaluation is strong enough to lead to a recovery in Chinese exports and improve China's GDP figures, then it will be bullish for oil."
"The short-term impact is muted and the long-term impact is bullish," Khan said.
Also on Tuesday, data showed auto sales in China fell 7.1 percent in July from a year earlier to 1.5 million vehicles, their biggest decline since February 2013. But overall seven-month growth this year stood slightly above 2014 figures.
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OPEC raised its forecast of 2015 oil supplies from non-member countries by 90,000 barrels per day, a sign that oil's price collapse is taking longer to hit North American shale and other competing sources than previously thought.
In a monthly report, the Organization of the Petroleum Exporting Countries said it expected no extra demand for its crude oil this year despite faster global growth in consumption.
"U.S. onshore production from unconventional sources is currently expected to decline marginally in the second half of 2015 through year-end, while U.S. offshore production is expected to grow due to project start-ups," OPEC said.
