Oil down 1 percent; U.S. crude near six-and-a-half-year low on Japan, China

Mon Aug 17, 2015 3:53pm EDT
 
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By Barani Krishnan

NEW YORK (Reuters) - Oil fell about 1 percent on Monday, with U.S. crude settling within range of a new 6-1/2-year low, after No. 3 oil consumer Japan said its economy contracted in the second quarter and China's slowdown continued to weigh on sentiment.

A stronger dollar .DXY, after a report that U.S. industrial output grew at the fastest pace in eight months, also made greenback-denominated commodities, including crude, less affordable for holders of the euro and other currencies. [USD/]

U.S. light crude CLc1 settled down 63 cents, or 1.5 percent, at $41.87 a barrel. Monday's intraday low of $41.64 came within striking distance of Friday's low of $41.35, the weakest front-month price since March 2009. Trading in expiring options for U.S. crude dominated the action.

Brent LCOc1, the global crude benchmark, settled down 45 cents, or nearly 1 percent, at $48.74 a barrel. It earlier hit a session low of $48.35, about $3 above its six-year low of $45.19 set in January.

Japan's economy shrank at an annualized pace of 1.6 percent in the second quarter. China fixed its exchange rate slightly higher for the second day running, after a surprise devaluation last week sliced 3 percent off the yuan.

"The general talk in the market is about the continued ripple effect from the Chinese devaluation," said David Thompson at Washington-based energy-specialized commodities broker Powerhouse.

Oil has lost about a third of its value since June.

U.S. crude itself has fallen for seven weeks in a row, after another rise last week in U.S. oil rig additions that hinted at growing production.   Continued...

 
Offshore oil platforms are seen at the Bouri Oil Field off the coast of Libya August 3, 2015. REUTERS/Darrin Zammit Lupi