In this article written for CNBC, I review the Bank of England's oil price model, which suggests that weakness in global demand was responsible for 60% of the decline in oil prices since it's recent peak in 2014.
China has to be the principal source of demand weakness, and that in turn seems to be driven by an over-valued yuan.
Capital Economics, a consultancy, reports this morning (Dec. 7) that capital outflows from China have increased again, apparently on expectations of pending remnibi devaluation. If the BoE model and our interpretation is correct, a RMB devaluation should be bullish for oil, perhaps quite bullish.
You can read the full story here: