Oil prices fell yesterday on concerns about the pace of economic growth in China, the world’s largest energy consumer, and signs that global oversupply is curbing Saudi crude exports.
China’s economy grew at the slowest pace in six years in the third quarter, according to official data released yesterday, making it more and more likely Beijing will cut interest rates to stoke activity.
Data also showed that Chinese oil demand fell slightly in September, meaning the country’s year-to-date growth is running behind the International Energy Agency’s forecast.
“With weak Chinese industrial production, we may see Chinese manufacturing PMI worsen, thus leading to weaker oil prices,” he said, referring to the forward-looking Purchasing Managers’ Index to be released later this week.
Brent for December delivery was down 76 cents at $49.70 a barrel at 0952 GMT. US crude for November delivery fell 57 cents to $46.69 a barrel, extending last week’s steep loss.
“Chinese GDP data and the rise in the Saudi stockpile due to falling crude oil exports are weighing on prices,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Saudi Arabia, the world’s biggest crude exporter, shipped 278,000 barrels a day less crude oil in August, trade data showed, suggesting demand for Saudi oil is sliding as the global supply glut persists.
Meanwhile Austrian oil producer OMV lowered its oil price forecasts yesterday, seeing 2016 prices at $55 a barrel and rising to $70 a barrel in 2017, $80 a barrel in 2018 and $85 a barrel from 2019 onwards.
As a result the company also said it would take a 1bn euro ($1.13bn) impairment charge on asset values in its upstream business.
Investors were also eyeing progress in the removal of western sanctions on Iran that will allow the oil-rich nation to revamp oil production and resume exports to western consumers.
The United States and the European Union on Sunday took formal legal steps to lift sanctions on Iran once Tehran meets the conditions tied to a landmark nuclear agreement with major world powers.
The market will also be watching economic data from the United States and the eurozone expected this week.
“Considering the expectations for both China and eurozone, we could see US being the tie-breaker between oil bulls and bears. US data has not been exceptionally strong, and thus could mean that oil prices could be facing some headwinds towards the end of the week,” Ang said.
The Buzzard oilfield in the North Sea, the largest contributor to the Forties crude stream that helps set the global oil price, was gradually ramping up production after suffering a four-day outage.