Traders
continued to shun oil which tumbled by over 1.2 per cent in the
domestic market on Tuesday amid speculation that a worsening rout in
Chinese equities which marked the biggest four-day slide since 1996
may spread to other parts of the world’s second biggest economy,
reducing the demand for oil.China is the world’s second biggest oil
consumer, accounting for nearly one-tenth of global oil demand.
China’s
Shanghai Composite which recorded the steepest one-day percentage
drop since 2007 on Monday, declining 8.5 per cent, tumbled 7.6 per
cent on Tuesday, as the benchmark fell below the 3,000 mark for the
first time in eight months.
Oil
failed to find relief from fresh stimulus by China’s central bank
aimed at reviving the sagging world’s second biggest economy. The
People’s Bank of China late Tuesday cut interest rates by 0.25 per
cent, the fifth cut since last November and lowered the amount of
cash to be kept aside by banks by 0.50 per cent.
Meanwhile,
mixed US data clouded the demand outlook for the fuel in the world’s
biggest economy as new home sales jumped in July and consumer
confidence soared to the second highest level in eight years in
August, but a regional manufacturing gauge tumbled this month while
services growth eased slightly.
Sales
of new US homes climbed 5.4 per cent to a 507,000 annual pace in
July, the consumer confidence index jumped to 101.5 in August from 91
in July, a US services gauge dropped to 55.2 from 55.7 in July while
the Richmond Fed Manufacturing index plunged to the no-change mark of
0 in August from 13 in July.
Oil
may rebound today after an industry report showed a bigger than
expected drawdown of 7.3 million barrels in US inventories last week,
easing fears over a widening supply glut.
At
the MCX, Crude oil futures, for the September 2015 contract, closed
at Rs 2,607 per barrel, down by 1.21 per cent, after opening at Rs
2,628, against the previous close price of Rs 2,639. It touched an
intraday low of Rs 2,600.
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