With the second largest oil consumer
China devaluing the yuan for the third straight day, the founding partner of
Again Capital predicted on Thursday that US crude oil could fall to the $30-$40
range as early as October, thereby forcing Saudi Arabia to finally cut down
production.
"It's coming early. It's coming
fast," said Again Capital analyst John Kilduff, who added that oil could
even hit rock bottom at $20 a barrel but that could have dire
consequences. However, Kilduff sees a rebound to the $50 level
before the year 2015 ends.
CNBC reported the yuan hitting a four-year low on Wednesday after Chinese authorities allowed it to weaken following an abrupt devaluation at the start of the week.
A weaker yuan erodes the purchasing
power of China for dollar-denominated imports like US crude oil. Oil
prices fell early Wednesday but rebounded following a statement by the
International Energy Agency that global demand is picking up.
Kilduff said oil demand
falling by 500,000 barrels may finally convince the Saudis to
finally reduce supply. –End-
Image by: EcoWatch
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