Brent oil prices were higher Tuesday, pulling back from near six-month lows, as commodity markets in general were calmer after a recent rout fuelled by concerns over China’s economy.
Brent North Sea crude for delivery in September climbed 32 cents to stand at $53.79 a barrel in late London deals.
The contract had earlier in the day hit $52.28 — the lowest point since the start of February.
US benchmark West Texas Intermediate for September delivery recovered from four-month lows but was still lower compared with Monday’s close.
In New York afternoon trading, WTI was down 68 cents at $48.07 a barrel. Earlier Tuesday, the contract struck $46.68 — the lowest level since late March.
Crude futures had slid on Monday as the steepest drop in Chinese equities since 2007 fuelled fears about reduced demand in China, the world’s top energy consumer.
“When the Chinese market drops to such an extent, it sparks a lot of fear among investors. The drop in crude oil prices is because of that fear,” said Daniel Ang, an investment analyst with Phillip Futures.
“We really have to see how the China market will move going forward,” he told AFP.
Analysts fear the turmoil in China’s stock market will affect demand in the country that has the world’s second biggest economy.
Oil prices have also been depressed owing to an oversupply of global crude coming from strong production in the United States as well as from the Organization of the Petroleum Exporting Countries that is led by Saudi Arabia.
“Oversupply and the looming return of exports from Iran are undoubtedly weighing on oil prices,” Tom Pugh, commodities economist at Capital Economics research group said on Tuesday.
“However, prices are likely to continue to be more influenced by sentiment towards commodities in general and by developments in China in particular,” he added in a note to clients.