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Chinese woes continue drag on oil prices

Crude oil prices nearing their low point for 2015.

By Daniel J. Graeber
Trouble on the Chinese stock market helps crude oil prices to near their lowest levels for 2015. Photo by Stephen Shaver/UPI
Trouble on the Chinese stock market helps crude oil prices to near their lowest levels for 2015. Photo by Stephen Shaver/UPI | License Photo

NEW YORK, July 28 (UPI) -- Crude oil prices moved closer to the low point for the year amid lingering fears about the health of the Chinese economy in an era of abundant supplies.

Brent crude oil prices fell 1 percent from the previous close to sell for $52.91, about 16 percent below the start of July. West Texas Intermediate, the U.S. benchmark, was relatively flat at $47.27, about 20 percent off from July 1.

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Both indices are near their low points for the year and off more than 50 percent from one year ago. Brent crude oil averaged $110 per barrel during second quarter 2014. In releasing quarterly figures, BP Chief Executive Bob Dudley said Tuesday crude oil prices "have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran."

Data last week from industry group the American Petroleum Institute show a 2.3 million barrel increase in stockpiles in the United States. The supply situation may be compounded if more of Iran's oil floods the market after sanctions pressure eases in response to the recent multilateral nuclear agreement.

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The Chinese economy, among the world's largest, is again showing signs of weakness. The Shanghai Index was in a free fall in early July, dragging on global crude oil markets see-sawing on supply and demand dynamics.

The Shanghai fell 8.5 percent in Monday trading for its worst day since the dawn of the global financial crisis in 2007. The index lost another 1.7 percent by the closing bell Tuesday.

Chinese National Development and Reform Commission Secretary-General Li Pumin said that, while the government is working to ensure qualitative growth, the economy is facing severe headwinds.

"The government is still facing slowing fiscal income and heavy pressure to stabilize employment," Li said Tuesday.

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