Oil prices fall after China devalues yuan

Oil prices slumped on Tuesday following a jump in the previous session, as China devalued its yuan currency after a run of poor economic data that underscored the market view that fundamentals are too weak to warrant higher oil prices.

Crude oil futures jumped almost 4 per cent on Monday, moving away from January lows, as speculative traders increased their net-long positions, but prices slumped again on Tuesday and remain over a quarter below their most recent peaks in May.

China devalued the yuan on Tuesday in what its central bank called a "one-off depreciation" of nearly 2 percent as its economy grows at its slowest pace in decades, guiding the currency to its lowest point in almost three years.

As a result, front-month Brent futures were at $50.18 a barrel at 0605 GMT (10.05am UAE time), down 23 cents from their last close. US crude fell 32 cents to $44.64.

"Global crude benchmarks remain under pressure, with Asian run cuts weighing on Atlantic Basin, Asian and Middle Eastern light grades," Energy Aspects said.

The overall low prices come on the back of weak supply and demand fundamentals, with output from key producers like the Organisation of the Petroleum Exporting Countries (Opec), Russia and the United States near record highs just as demand growth slows.

In China, the world's No. 2 economy and oil consumer, exports tumbled 8.3 per cent in July in their biggest fall in four months, threatening the government's 7 per cent economic growth target for this year, already the lowest in decades.

"Talk of run cuts in Asia driven by weak distillates markets does not bode well for crude prices," Energy Aspects said.