– This is the script of CNBC's news report for China's CCTV on August 4, Tuesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Tracking 19 commodities' prices, the Reuters CRB index has fallen over 30% during the past 12 months.
And oil is the heavy weight for this index.
Oil sank to six-month lows on Monday with Brent crude falling below $50 a barrel on sluggish U.S. and Chinese economic data and bets for weaker gasoline consumption in the United States after tearaway demand earlier in the summer.
Plus, a survey showed Saudi Arabia and other key OPEC members keen to defend market over crude prices, which are down 12 percent this year, after last year's 48 percent tumble.
Hedge funds and other speculators have cut their bullish exposure to U.S. crude to a near 5-year low, trade data showed on Friday, as local drillers added rigs and pumped at full throttle despite the global oil glut.
Many traders, who pin oil's fate to the current oversupply, believe that Iran - the world's fourth largest oil producer , will soon be allowed to export crude again. Once Western sanctions are lifted, Tehran will be able to ramp up production by 500,000 barrels per day within a week, Iranian oil minister Bijan Namdar Zangeneh said on Monday.
[Mark Mobius, Executive Chairman of Templeton Emerging Markets Group] "Now what happened is that, many oil companies would think, well, 60-70 will be the low point, therefore we will make our plans beased on that. We will continue to supply and pump, assuming those prices."
While Mobius does intend to reduce Templeton's exposure to oil assets if prices continue to sink, he encourages investors to take a broader view of the sector before making a call.
[Mark Mobius, Executive Chairman of Templeton Emerging Markets Group] "Very often, people will be selling oil companies based on oil prices, but they are making mistake, because these companies can still make good money. (it's about low-cost producers, is it not) On the E&P side, of course, low-cost producers, but to tell you frankly, 50 dollars a barrel, a lot of people are in trouble."
Most of the time, the business of the refining players is negatively correlated with crude prices.
This is because the companies use oil as an input from which they derive refined petroleum products like gasoline - the prime transportation fuel in the U.S. Hence, lower the oil price, higher will be their profits.
Investors should notice that most of the oil refining firms' fourth-quarter 2014 earnings surpassed the estimate. Higher refining margins for weak crude prices led to the improvement.
Similarly, oil marketing firms, like this one, Alon USA Energy, also got a boost.
Although low-cost producers are traditionally the principal beneficiaries of cheaper oil, Mobius warns that industry-wide firms are in trouble with prices at current levels.
CNBC's Qian Chen, reporting from Singapore.
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