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- Crude oil prices continued to slump on Wednesday as China allowed its currency to fall sharply for a second day, triggering concerns over the country’s economic health just as oil production hit multi-year highs. China’s yuan hit a four-year low on Wednesday, slipping further a day after authorities devalued it to support its struggling economy and sparking fears of a global currency war. Analysts said they expected China’s government to intervene further this year in stimulate economic growth. The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that its members continued to boost supplies. According to secondary sources cited by the report, OPEC produced 31.51 million barrels per day (bpd) in July – 1.5 million bpd more than its 30-million-bpd target. OPEC also raised its forecast of oil supplies from non-member countries in 2015, a sign that crude’s price collapse is taking longer than expected to hit U.S. shale drillers and other competing sources, and the group forecast no extra demand for its crude oil this year. API said crude oil supplies fell by 847,000 barrels last week, less than the 1.8 million barrel drop seen, with data on refined products not immediately available. Later on Wednesday the U.S. Department of Energy will release its own estimates of crude and refined product stocks that are more closely-followed by the market.
- Asian stocks and emerging market currencies tumbled on Wednesday and commodities fell after China allowed the yuan to fall sharply for a second straight day, forcing investors to seek refuge in safe-haven government debt. The central bank had billed Tuesday’s change as a free-market reform but experts suspect it could be the beginning of a longer-term slide in the exchange rate aimed at making China’s ailing exports more competitive. The rapid drop in the value of China’s currency — around 4 percent in the last two days — dealt a body blow to appetite for risky assets globally, with equities, currencies and commodities coming under selling pressure as money managers feared it could ignite a currency war that would destabilize the global economy.
- China’s factory output rose 6.0 percent in July from a year earlier, missing market forecasts and reinforcing expectations that the economy is in need of fresh stimulus to prevent a deeper slowdown. Analysts polled by Reuters had forecast a 6.6 percent rise, easing from 6.8 percent in June. Fixed-asset investment, a crucial driver of the world’s second-largest economy, rose 11.2 percent in the first seven months compared with the year-ago period, again below expectations, the National Bureau of Statistics showed on Wednesday. Economists had expected a 11.5 percent rise, edging up from June. Retail sales rose 10.5 percent in July from the same time last year, slightly below forecasts for 10.6 percent growth, which would have been even with June’s reading. The sluggish growth figures followed disappointing trade and inflation earlier this month that showed persistent weakness in the world second-largest economy.