Oil drops 2 percent on Wall St. losses, weak China data

Updated: Sat, Dec 15, 2018
12:35 am
Reuters
RELATED NEWS
Unpaid work done by women worth 43-times Apple's annual turnover: Oxfam Unpaid work done by women worth 43-times Apple's annual turnover: Oxfam
India's richest 1% get richer by 39 pc in 2018; just 3 pc rise for bottom-half: Oxfam India's richest 1% get richer by 39 pc in 2018; just 3 pc rise for bottom-half: Oxfam
ProSieben sees pressure easing as Netflix raises prices ProSieben sees pressure easing as Netflix raises prices
Sports Direct's Ashley in talks for music retailer HMV: Sky Sports Direct's Ashley in talks for music retailer HMV: Sky
Rheinmetall plans to sue Germany over Saudi arms embargo: Spiegel Rheinmetall plans to sue Germany over Saudi arms embargo: Spiegel

Oil prices dropped about 2 percent on Friday, weighed down by a falling U.S. stock market, while weak economic data from China pointed to lower fuel demand in the world`s biggest oil importer.

Brent crude futures for February delivery fell $1.16 to $60.29 a barrel, a 1.9 percent loss, by 1:15 p.m. ET (1815 GMT). U.S. West Texas Intermediate (WTI) crude futures fell $1.24 to $51.34 a barrel, a 2.4 percent loss.

Global benchmark Brent was set for a weekly loss of about 2.2 percent, while WTI was on track to decline 2.4 percent.

"The oil complex remains vulnerable to heavy selling into the equities especially when combined with a strengthening in the U.S. dollar as is the case so far today," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

U.S. equity markets broadly fell as China`s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years. The report added to nerves about U.S.-China trade relations.

Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, though runs were 2.9 percent above year-ago levels.

"The energy complex is on the back foot this morning as a batch of soft Chinese economic data triggers a flurry of pre-weekend profit-taking," PVM Oil analyst Stephen Brennock said.

Concerned by mounting oversupply, the Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed last week to reduce output by 1.2 million barrels per day (bpd), or more than 1 percent of global demand.

"For the time being until the OPEC cuts start kicking in, the market is oversupplied in the short term," said Tony Nunan, oil risk manager at Mitsubishi Corp. "If China is slowing down, that`s definitely a concern."

U.S. energy firms cut 4 oil rigs in the week to Dec. 14, General Electric Co`s Baker Hughes energy services firm said in its closely followed report on Friday. The data is seen as an indicator of future production.

The International Energy Agency said on Thursday it expected a deficit in oil supply by the second quarter of next year, provided OPEC members and other key producers stuck closely to last week`s deal to cut output.

As part of the agreement, de facto OPEC leader Saudi Arabia plans to reduce its output to 10.2 million bpd in January.

The IEA kept its 2019 forecast for global oil demand growth at 1.4 million bpd, unchanged from its projection last month, and said it expected growth of 1.3 million bpd this year.

Barclays said on Friday it expects oil prices to rebound in the first half of 2019 on falling inventories, Saudi Arabia`s export cuts and an end to the Iran sanction waivers.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

By continuing to use the site, you agree to the use of cookies. You can find out more by clicking this link

Close