Oil prices rise, supported by revaluation of Chinese yuan
Oil prices rise, supported by revaluation of Chinese yuan
Agence France-Presse, London
Oil prices rose on Friday, supported by a revaluation of the yuan currency the previous day, seen as encouraging Chinese demand for energy from the world's second-biggest consumer of crude.
New York's main contract, light sweet crude for delivery in September, added 47 U.S. cents to US$57.60 per barrel in electronic deals on Friday.
In London, the price of Brent North Sea crude oil for delivery in September increased 64 U.S. cents to $56.36 per barrel.
According to Sucden analyst Sam Tilley, oil prices on Thursday "recovered some losses from the previous few days after China announced it would revalue its currency".
"A revaluation of the yuan could possibly increase demand for crude in China as imports would effectively be cheaper, but in the longer term the revaluation could slow China's growth."
Late on Thursday the Chinese central bank had announced that the yuan was now pegged to a basket of unnamed currencies and would be allowed to "float" within a 0.3-percent range from its new value of 8.11 yuan to the dollar.
That value effectively represents about a 2 percent appreciation of the yuan which for a decade was pegged to the dollar at around 8.28.
Analysts said that the revaluation makes it moderately cheaper for Chinese buyers to purchase oil imports because they are denominated in U.S. dollars.
"The market sentiment is that short-term, yes it may get easier for Chinese refiners to raise imports, therefore potentially driving up crude prices," said analyst Victor Shum, of US energy consultancy firm Purvin and Gertz.
"But the reality is that (it) is so far a symbolic gesture."
In addition, traders were keeping an eye on developments in London following four bomb attack attempts on the capital's transport system on Thursday, exactly two weeks after the deadly suicide bombings on July 7.
The recent attacks "created longer term concerns over the impact to economic growth in the UK", Tilley said.
Elsewhere, terrorist attack threats were also emerged in Saudi Arabia, the world's number one crude producer and exporter.
The U.S. embassy in Riyadh warned this week that terrorists could strike again in Saudi Arabia, as local authorities did not rule out further attacks similar to those attributed to Al-Qaeda militants.