Oil prices drop Tuesday as China economic slowdown threatens to spread
Henning Gloystein / Reuters
Petroleumworld 01 22 2019
Oil prices fell on Tuesday on signs that an economic slowdown in China, the world's second-largest economy and oil consumer, was spreading, stoking concerns over future fuel demand.
The gloomy economic news has pulled down financial markets across Asia, including crude oil futures.
International Brent oil futures LCOc1 were at $62.26 per barrel at 0736 GMT, down 48 cents, or 0.8 percent, from their previous close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $53.43 per barrel, down 0.7 percent, or 37 cents.
China's state planner on Tuesday warned that the downward pressure on the economy will affect China's job market as falling factory orders point to a further drop in activity in coming months and more job shedding.
On Monday, China reported its lowest annual economic growth since 1990.
China's oil imports have so far defied the economic slowdown, hitting a record above 10 million barrels per day (bpd) in late 2018, but many analysts believe the country to be at peak energy growth, with its thirst set to wane as the slowdown bites.
“Slowing manufacturing activity in China is likely weighing on demand,” said Singapore-based tanker brokerage Eastport, adding that industrial slowdowns tended to be leading indicators that fed gradually into lower demand for shipped oil products.
In a sign of spreading economic weakness, South Korea's export-oriented economy slowed to a six-year low growth rate of 2.7 percent in 2018, official data showed on Tuesday.
This came after the International Monetary Fund on Monday trimmed its 2019 global growth forecast to 3.5 percent, down from 3.7 percent in last October's outlook. There is a high correlation between economic growth and oil demand growth.
Gloomy outlook, few world leaders at Davos 2019
“This was the second downturn revision in three months, and we can still see further downgrades in near future if trade tensions escalate, the UK exits with a no-deal from the EU, or China's economic growth drops more sharply,” said Hussein Sayed, chief market strategist at futures brokerage FXTM.
Despite the darkening outlook, oil prices have been getting some support from supply cuts started in late 2018 by the Organization of the Petroleum Exporting Countries (OPEC).
“The effects of OPEC-led cuts ... will undoubtedly place a price floor under crude oil,” said Singapore-based brokerage Phillip Futures on Tuesday.
We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories
Reporting Henning Gloystein in SINGAPORE and by Colin Packham in SYDNEY; Editing by Richard Pullin and Christian Schmollinger from Reuters
reuters.com 01 22 2019 07:53 GMT
Hit your target - Advertise with us
PW 300.000 plus request per week
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to firstname.lastname@example.org
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: email@example.com
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels