Oil prices bounce back but remain under pressure
Crude oil prices bounced on Thursday following losses earlier in the week, with Chinese stocks picking up after the government launched new steps to stop a rout that had knocked off a third of the country's share market value.
Front-month US crude futures were up 75 cents at $52.40 per barrel at 0411 GMT, but remain almost 8 per cent below levels at the end of last week.
Brent crude was 70 cents higher at $57.75 a barrel. That is over 4 per cent below last Friday.
China’s securities regulator took the drastic step late on Wednesday of ordering shareholders with stakes of more than 5 per cent from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets.
The police are also investigating clues pointing to potentially "malicious" short-selling of Chinese shares, state news agency Xinhua said on Thursday.
Demand was also supported by a return from maintenance of a 120,000 barrels per day crude distillation unit in Japan, where machinery orders hit a 7-year high in May.
Yet analysts said the oil market remained under pressure and that big gains were unlikely.
"Oil is being pressured on multiple fronts, and China's equity wobble, the prospect of Iran's re-entry to the market and low liquidity all add up to an extremely fraught environment. Oil needs to establish a new range and we would see the WTI crude low around $50 with the upside capped at $58," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
A surprise increase in US stockpiles despite the peak demand American summer driving season added to global oversupply as the Organization of the Petroleum Exporting Countries (Opec) and Russia produce at near record levels.
Iranian exports could also resume at full throttle if major global powers and Iran find a compromise in nuclear talks this week that could lead to a lifting of western sanctions against Tehran.
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