Oil prices remained weak yesterday as the global economic outlook darkened further and cooperation between oil producing countries to curb oversupply looked unlikely.
In Japan, the economy shrank an annualized 1.2% in April-June despite ongoing government and central bank measures to support growth.
China’s crude oil imports fell 13.4% in August to 26.59 million tonnes (6.29 million barrels per day) from the previous month, although underlying demand remains strong.
Igor Sechin, chief executive of Russian oil-major Rosneft said during the Financial Times’ Commodity Retreat in Singapore this week that Asia’s slowdown “has a controllable character” due to a firming Chinese real-estate market, while unlike during the 1997/98 crisis most Asian countries now had significant currency reserves.
Sechin also said that he expected China’s oil demand to continue to rise in the long-term: “In 15 years, according to our estimates, China will consume 850 million tonnes of oil, i.e. 350 million tonnes of oil more than now.”
Yet in the short-term, global oversupply still dominates oil markets.
Morgan Stanley said it expected prices to remain low until a global overhang in production was worked off by the fourth quarter of 2016.
“In the interim, non-fundamental factors (FX, macro themes, fund flows, etc) and headlines will likely remain key price drivers,” the bank said. Oil prices have fallen almost 60% since June 2014 on a global glut, driven by
US crude CLc1 was at $44.31 per barrel at 0443 GMT, down $1.74 since Friday’s close, weighed down by the closure of the largest crude distillation unit at Exxon Mobil Corp’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery. US markets were closed on Monday for a holiday.
Brent futures LCOc1, unaffected by the refinery closure, added 15 cents to $47.78 barrel, although the global benchmark was still down $1.49 from its opening value on Monday.
