Oil price tumbles as outlook weakens

OIL PRICES dropped close to 2 per cent on Friday on a worsening global economic outlook after the European Central Bank (ECB) warned of continued weakness and fresh data showed Chinese imports and exports slumped last month.

With surging US oil supply also unsettling markets, international benchmark Brent crude futures lost $1.22, or 1.9 per cent, to $65.08 a barrel.

US West Texas Intermediate (WTI) crude futures were down 96 cents, or 1.7 per cent, at $55.71.

Financial markets, including crude oil futures, took a hit after comments on Thursday from ECB President Mario Draghi, saying the European economy was in “a period of continued weakness and pervasive uncertainty”.

Europe’s economic weakness comes as growth in Asia is also slowing.

So far oil demand has held up, especially in China, where imports of crude remain above 10 million barrels per day (bpd). Yet a slowdown in economic growth is likely to dent fuel demand and pressure prices at some point.

On the supply side, crude oil has been receiving support this year from output cuts led by the Organization of the Petroleum Exporting Countries.

But these efforts are being undermined by soaring US crude oil production, which has increased by more than 2 million bpd since early 2018.