Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices dip on weaker China data as demand stalls

Published 09/14/2015, 05:20 AM
Updated 09/14/2015, 05:20 AM
© Reuters. Oil pumps are seen at a MAX oil station in Yangon

© Reuters. Oil pumps are seen at a MAX oil station in Yangon

By Lisa Barrington

LONDON (Reuters) - Oil prices fell on Monday as weaker-than-expected Chinese data weighed on markets, adding to concerns that declining global demand would exacerbate a surplus of crude.

Traders are also waiting to see whether the U.S. central bank raises interest rates for the first time in nearly a decade later this week.

Should interest rates rise, analysts expect oil to fall as a stronger dollar would undermine demand from importing countries.

Oil prices have fallen almost 60 percent since June 2014 on the back of the largest global surplus in modern times and concerns about a slowing Chinese economy.

Growth in China's investment and factory output missed forecasts in August. A recent run of weak data from the world's second-largest economy has raised the chances that third-quarter economic growth may dip below 7 percent for the first time since the financial crisis.

"There has been a very broad-based reaction to China across commodities, industrial metals and equities," SEB chief commodities analyst Bjarne Schieldrop said.

Front-month Brent crude futures (LCOc1) were down 59 cents at $47.55 a barrel by 0830 GMT.

U.S. crude futures (CLc1) were down 21 cents at $44.42 a barrel.

The International Energy Agency said last week that ongoing production cuts would lead to a rebalancing of the oil market by next year.

The U.S. oil rig count fell by 10 to 652 last week, the second straight weekly drop.

Yet several banks said the immediate outlook remained weak, with Goldman Sachs (NYSE:GS) and Commerzbank (XETRA:CBKG) cutting their oil price forecasts last week.

Morgan Stanley (NYSE:MS) said on Monday: "Both the supply and demand pictures look less favorable over the coming months ... Outside the U.S., oil fundamentals appear to be slipping seasonally."

Barclays (LONDON:BARC) said: "Most producers seem to be coming around to the fact that 2016 oil and gas prices are unlikely to see a significant recovery."

Macquarie noted that global auto sales, which fell 1 percent in August and 0.8 percent in July, were dragging on demand.

Kuwait and Iran have cut their crude prices to Asia to multi-year lows against top exporter Saudi Arabia as the battle for market share pits members of the Organization of the Petroleum Exporting Countries against each other.

OPEC's monthly market report will be published later on Monday.

© Reuters. Oil pumps are seen at a MAX oil station in Yangon

Latest comments

Risk Disclosure: 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.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.