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.