This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Oil Off Highs After China Yuan News

NEW YORK ( TheStreet) -- Stocks weren't the only assets getting a lift from China's yuan revaluation announcement , as oil, too, rallied on the news. But crude futures pulled back at midday as investors reevaluated the repercussions.

On Saturday, China said it will allow the yuan to appreciate against the dollar following a two-year peg to the greenback. The peg has lent a hand to Chinese exporters of late by keeping costs of their goods artificially deflated. But as one of the globe's largest end users of oil, the currency loosening would make the price of overseas goods, particularly dollar-dominated crude, more enticing.

The headline helped propel crude prices in the morning. But the rally began petering out alongside stocks at midday. Phil Flynn, energy analyst at PFGBest, described the mood as "anticlimactic," saying market participants realized the move was not completely unexpected and many may have already priced it in. China's decision also raises some issues in his mind.

"Number one, if you look at the move on the face of it, it's good for commodities because it makes commodities cheaper in China and increases our exports. But if you think about it, it'll slow down China's exports, which could slow down growth," Flynn said. "I don't think the move is as bullish as people think."

The July crude oil contract, which had traded near the $79 a barrel mark earlier, was recently improving 38 cents at $77.56, while the more actively traded August delivery contract was gaining 13 cents at $78.30.

The dollar had been trading weaker against a group of currencies earlier in the session, but the dollar index was advancing 0.2% of late.

Energy stocks were helping lead the major averages higher today, as the NYSE Arca Oil index was up 0.6% and the Philadelphia Oil Service Sector index rose 0.3%. On the Dow, shares of Chevron (CVX - Get Report) and Exxon Mobil (XOM - Get Report) were trading 1% and 0.9% higher.

In further developments following the BP (BP - Get Report) oil spill in the Gulf of Mexico, the Sunday Times in London reported that BP will try to raise $50 billion to cover liabilities connected with the disaster. Separately, the firm said that costs associated with the spill have reached $2 billion thus far. Making matters worse on the public relations front, CEO Tony Hayward drew criticism for spending time at a yacht racing event Saturday in England.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ACY $11.70 0.00%
BP $39.61 0.00%
CVX $104.28 0.00%
XOM $83.58 0.00%
AAPL $123.25 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs