Oil slides on China trade slump, but crude im­ports re­main high

Business World - - World Markets -

SIN­GA­PORE — Oil prices fell by al­most one per­cent on Mon­day, with Brent crude slip­ping be­low $60 per bar­rel, af­ter Chi­nese data showed weak­en­ing im­ports and ex­ports in the world’s big­gest trad­ing na­tion and sec­ond-largest crude oil con­sumer.

In­ter­na­tional Brent crude oil fu­tures were at $59.91 per bar­rel at 0403 GMT, down 57 cents or 0.9% from their last close.

US West Texas In­ter­me­di­ate (WTI) crude fu­tures were down 47 cents or 0.9% at $51.12 a bar­rel.

China’s De­cem­ber over­all ex­ports fell by 4.4% from a year ear­lier, the big­gest monthly drop in two years, of­fi­cial data showed on Mon­day, point­ing to fur­ther weak­en­ing in the world’s sec­ond­largest econ­omy.

The coun­try’s im­ports last month also con­tracted, fall­ing 7.6%, the big­gest de­cline since July 2016.

“Crude fu­tures were back in the red as trad­ing be­gan for a fresh week in Asia, in tan­dem with most of the re­gion’s stock mar­kets… (as) China early Mon­day re­ported $351.76-bil­lion trade sur­plus in dol­lar terms for 2018, the low­est since 2013,” said en­ergy con­sul­tant Van­dana Hari of Vanda In­sights in a note on Mon­day.

The weak trade fig­ures con­firm a raft of in­di­ca­tors that have been point­ing to an eco­nomic slow­down since the sec­ond half of 2018.

“Pro­ducer price in­fla­tion has de­cel­er­ated for six con­sec­u­tive months, adding to other signs of cool­ing in­dus­trial ac­tiv­ity (in China) amid weak­en­ing global de­mand,” rat­ing agency Moody’s In­vestors Ser­vice said in a note.

Traders said the data pulled down crude oil fu­tures and Asian stock mar­kets alike, which had both posted mod­est gains ear­lier on Mon­day.

Eco­nomic re­search firm TS Lom­bard said oil prices were capped as “the world econ­omy is now slow­ing… lim­it­ing the scope for pos­i­tive sur­prises in oil de­mand and ham­per­ing in­ven­tory re­duc­tion.”

Ole Hansen, head of com­mod­ity strat­egy at Den­mark’s Saxo Bank, said “the de­te­ri­o­ra­tion seen re­cently in for­ward-look­ing eco­nomic data from the US to Europe and China” meant that the up­side for crude oil fu­tures was likely lim­ited to $64 per bar­rel for Brent and for $55 for WTI.

De­spite the weak Chi­nese trade data, the coun­try’s oil im­ports re­mained sky-high in De­cem­ber at 10.31 mil­lion bar­rels per day (bpd), hold­ing above the 10 mil­lion bpd mark for the sec­ond month in a row, on stock­build­ing by small in­de­pen­dent re­fin­ers who were try­ing to use up an­nual quo­tas.

Amid this strong de­mand from the world’s big­gest oil im­porter, the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) and some non-OPEC al­lies, in­clud­ing Rus­sia, have been cut­ting sup­ply since late 2018, pro­vid­ing crude prices with some sup­port.

In the US, drillers cut four oil rigs in the week to Jan. 11, bring­ing the to­tal count down to 873, en­ergy ser­vices firm Baker Hughes said in a weekly re­port on Fri­day. —

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.