By Ben Sharples and Ann Koh
US oil futures in New York slid to the lowest in 12 years as turmoil in China’s markets pushes crude closer to $30 a barrel.
West Texas Intermediate slid as much as 5.5 percent Thursday on concern the economic slowdown in the world’s biggest commodity consumer is worsening. China’s central bank reduced the onshore yuan’s fixing to the lowest since March 2011, triggering a selloff that led to the closure of Chinese stock exchanges. Brent oil will slump to $30 in the next 10 days, according Nomura Holdings Inc., while UBS Group AG sees an oversupply pushing prices even lower.
“The market trades on greed and fear, and right now fear dominates greed,” said Gordon Kwan, a Hong Kong-based analyst at Nomura. “Commodity futures markets are always forward looking, and they fear that the depreciation of the yuan foreshadows further weakness in the Chinese economy.”
Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Stockpiles at Cushing, Oklahoma, the delivery point for US benchmark crude, rose to a record while nationwide stockpiles remain about 100 million barrels above the five-year average, according to Energy Information Administration data.