Published on : Jan 08, 2016
The oil surplus is currently one of the most talked about topics in the world, with debaters on both sides vehemently defending whether or not the crude overproduction would be good for the economy. While the shale revolution has proven to be great for individuals because of the low oil prices that allow them to use vehicles for cheaper, companies that rely on the production of crude are taking a beating. With mostly negative outlooks and a continuous supply of oil by North America and the Middle East, the global stockpile of crude just keeps growing.
On Friday, the oil prices were kept in recovery for quite a while, but Chinese stocks loom over the global crude oil industry. China stock market grew and the investors consequently looked for ways to create new bargains after the sell-off that was made earlier this week.
Oil prices have now fallen to lows since more than a decade, as was recorded on Thursday. This happened immediately after the Chinese government let the yuan drop faster than what most experts predicted. The move created a selloff that was born out of shock and gave rise to concerns on the future of the oil market regarding the economical backing of second-largest consumer of oil in the world.
The prices of oil have shied away from the lows that it would have reached an intraday, closing in at US$32 per share. However, the growth is still quite weak and will end up testing a US$30 on the short term if it does not hold.
There was a rise of 1.5% in the global oil benchmark, Brent crude, which reached to US$34.27 per barrel within ICE Futures exchange in London. The New York Mercantile Exchange from West Texas, saw intermediate future that were found to be trading up to US$33.64 per barrel, or a rise in 1.1%.
A 2% increase was settled up on the Shanghai Composite Index, which signifies up to 3186.4, indicating a 7% drop in Thursday. It ended 10% lower for the rest of the week. It has a highly completive market.