Home / International/ Oil falls to $53 on economic worries, surging supply

Oil falls to $53 on economic worries, surging supply


Comments / {{hitsCtrl.values.hits}} Views / Thursday, 3 January 2019 01:21

Facebook

FILE PHOTO: Oil rigs in a storage facility wait to be transported to the oil field in Midland, - REUTERS

LONDON (Reuters): Oil fell to around $53 a barrel on Wednesday, pressured by rising output in major OPEC and non-OPEC producers and concern about an economic slowdown that could weaken demand.

Russian production hit a post-Soviet record in 2018, figures on Wednesday showed. Earlier this week, official data showed US output reached a record in October and Iraq boosted oil exports in December.

Brent crude LCOc1 fell 70 cents to $53.10 a barrel at 0838 GMT. On 26 December it reached $49.93, the lowest since July 2017. US crude CLc1 slipped 62 cents to $44.79.

“The omens are far from encouraging,” said PVM oil broker Stephen Brennock about the price outlook for 2019, citing rising non-OPEC supply and the likelihood of further increases in oil inventories.

“The current bearish bias will therefore continue in the near term and it stands to reason that oil will struggle to break out from its current trough.”

Oil fell in 2018 for the first year since 2015 after buyers fled the market in the fourth quarter over growing worries about excess supply and economic slowdown. US crude slumped nearly 25% and Brent by almost 20%.

Surging shale output has helped make the United States the world’s biggest oil producer, ahead of Saudi Arabia and Russia. Oil production has been at or near record highs in all three countries.

Adding to concern about economic slowdown, a series of purchasing managers’ indexes for December mostly showed declines or slowdowns in manufacturing activity across Asia - the main growth region for oil demand.

China issued its first batch of crude import quotas for 2019 on Wednesday at a lower volume than for the same batch a year ago though expectations are for the volumes to climb later this year.Independent market analyst Greg McKenna said in a note on Wednesday that it was “difficult for traders and investors to ignore what looks like a genuine global economic slowdown.”The signs of rising production illustrate the challenge faced by the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, which are returning to supply restraint in 2019, to support the market.

But OPEC is hopeful the supply-cutting deal will work. The Energy Minister for the United Arab Emirates said on Tuesday that he remained optimistic about achieving a market balance in the first quarter.

 


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Implementing SC Orders

Wednesday, 26 June 2019

The Supreme Court on 18 April has ordered six Ministries, their Secretaries and three Government authorities to take immediate several effective measures to be enforced in the design and construction of all parts of new buildings and services the pub


Need for an education revolution: Future of our kids and the nation is at risk – Part I

Wednesday, 26 June 2019

It is said that a country is only good as her people. A country belongs to her people. In a democratic country, people elect the leaders to manage the country on their behalf. Hence, to be hailed as a progressive country, it is paramount for a countr


Universalism versus tribalism

Wednesday, 26 June 2019

The most venerable Warakagoda Sri Gnanarathana Thero Mahanayake of the Asgiriya chapter has announced that his recent remarks, have been misconstrued and distorted. The authenticity of recorded information in cyber space is an inconvenient truth of t


A sermon on stoning

Tuesday, 25 June 2019

It is generally assumed we have passed the Stone Age, the Bronze Age, the Iron Age, the Industrial Age, and the Space Age.After a breath-taking dive in to the Digital Age, we are well on our way to the Age of Automation and Artificial Intelligence. N


Columnists More