[SINGAPORE] Oil prices slumped on Tuesday following a jump in the previous session, as China devalued its yuan currency following a run of poor economic data that underscored the market view that fundamentals are too weak to warrant higher oil prices.
Crude oil futures jumped almost 4 per cent on Monday, moving away from January lows, as speculative traders increased their net-long positions, but prices slumped again on Tuesday morning and remain over a quarter below their most recent peaks in May.
China devalued the yuan on Tuesday in what its central bank called a "one-off depreciation" of nearly 2 per cent as its economy grows at its slowest pace in decades, guiding the currency to its lowest point in almost three years.
As a result, front-month Brent futures were at US$50.02 a barrel at 0308 GMT, down 39 cents from their last close. US crude fell 42 cents to US$44.54. "Prices are still facing heavy bearish pressures. This could mean that prices could reach 2015 lows," Singapore-based Phillip Futures said, although the brokerage added that it does not expect oil prices to fall below this year's lowest point reached in January.
The overall low prices come on the back of weak supply and demand fundamentals, with output from key producers like the Organization of the Petroleum Exporting Countries (Opec), Russia and the United States near record highs just as demand growth slows.
In China, the world's No.2 economy and oil consumer, exports tumbled 8.3 per cent in July in their biggest fall in four months, threatening the government's 7 per cent economic growth target for this year, already the lowest in decades.