Reuters
Published Jan 21, 2019 05:12AM ET
Oil falls as slowing China economy dents markets
By Amanda Cooper
LONDON (Reuters) - Oil prices fell on Monday, in line with weaker stock markets after evidence that economic growth in China, the world's second largest crude consumer, eased in 2018.
Brent crude oil futures (LCOc1) were last down 35 cents on the day at $62.35 a barrel by 0946 GMT, while U.S. crude futures (CLc1) were down 23 cents at $53.57 a barrel.
The broader financial markets were weaker after data showed China's 2018 economic growth slowing to the weakest in 28 years, at 6.6 percent versus 6.8 percent in 2017.
Although the slowdown was in line with expectations and not as sharp as some analysts had expected, the cooling of the world's No.2 economy casts a shadow over global growth.
"It remains quite likely that the trade spat with the U.S. has played a part in this latest slowdown, but investors should also factor in that it simply isn’t possible for the Chinese economy to grow at the pace that it has over the last 10 years, in the next 10 years, as the law of diminishing returns kicks in, and the economy becomes more mature," CMC Markets chief market analyst Michael Hewson said.
While there is concern that a slowing global economy could impact oil demand growth and, therefore the price outlook, the production cuts implemented by the Organization of the Petroleum Exporting Countries (OPEC) would likely support crude oil prices, analysts believe.
"You can't justify oil prices at these levels. We're looking basically at an average of almost $70 a barrel for Brent in 2019," ING commodities strategist Warren Patterson said.
"I am getting increasingly concerned about how tight the market will be going into 2020."
A separate report from China's National Bureau of Statistics on Monday showed crude oil refinery throughput climbed to a record 12.1 million barrels per day (bpd), up 6.8 percent from the previous year.
In the United States, energy companies cut the number of rigs drilling for oil by 21 in the week to Jan. 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.
It was biggest decline since February 2016, as drillers reacted to the 40-percent plunge in U.S. crude prices late last year. However, U.S. crude oil production
With the rig count stalling, last year's growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd.
GRAPHIC: U.S. rig count slows, output rises - https://tmsnrt.rs/2NsKwpc
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.