Oil Rout Seen Ending as Demand Trumps China’s Market Crash


Oil’s biggest slump in four years will lose momentum because the plunge in Chinese equities and Greece’s economic crisis won’t dent global demand, according to Morgan Stanley, UBS Group AG and Societe Generale SA.

Crude is set for a “modest recovery” after declining 13 percent in the five sessions through Wednesday, Morgan Stanley estimates, while demand will push prices up by year-end, according to hedge fund manager Andrew J. Hall. Any nuclear deal with Iran won’t quickly revive the OPEC member’s crude exports, so wouldn’t immediately weigh on prices, Societe Generale said.

U.S. crude erased this year’s gains to trade at about $52 a barrel amid a stock-market rout in China, the world’s second-largest oil consumer. European leaders talked openly about a Greek exit from the euro before a weekend summit, a break from years dismissing the possibility. Nuclear talks between world powers and Iran, the fourth-largest producer in the Organization of Petroleum Exporting Countries, missed another deadline. (by Grant Smith, Bloomberg Business)

Also see our reasoning for predicting higher oil prices near term.