Oil falls three percent on rising U.S. production, economic slowdown fears

By Laila Kearney NEW YORK (Reuters) - Oil fell about 3 percent on Monday, its biggest one-day percentage drop in a month, after an increase in U.S. crude drilling pointed to further supply growth amid continuing concerns about a global economic slowdown. Brent crude oil futures sank $1.71, or 2.8 percent, to settle at $59.93 a barrel, while U.S.

Reuters January 29, 2019 03:05:49 IST
Oil falls three percent on rising U.S. production, economic slowdown fears

Oil falls three percent on rising US production economic slowdown fears

By Laila Kearney

NEW YORK (Reuters) - Oil fell about 3 percent on Monday, its biggest one-day percentage drop in a month, after an increase in U.S. crude drilling pointed to further supply growth amid continuing concerns about a global economic slowdown.

Brent crude oil futures sank $1.71, or 2.8 percent, to settle at $59.93 a barrel, while U.S. West Texas Intermediate crude slumped $1.70, or 3.2 percent, to settle at $51.99 a barrel.

The last time both crude benchmarks saw bigger daily percentage drops was on Dec. 27.

"We're seeing oil prices really start to break down here," said Phillip Streible, senior market strategist at RJO Futures in Chicago. "One of the factors that played (into prices) is the rising rig count that we saw on Friday."

U.S. drillers added 10 oil rigs last week, according to energy services firm Baker Hughes on Friday, in another sign of the expanding record U.S. crude production that has soured market sentiment.

For graphic on U.S. oil production & drilling levels, click https://tmsnrt.rs/2Tm4u4I

The trade war between Washington and Beijing weighed on futures as investor optimism waned that the two sides would soon end the months-long tariff fight that has damaged China's economy.

That, coupled with uncertainty about how long the U.S. government will stay open after Washington agreed to end a historic shutdown, dampened investor optimism, said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

"I think both those factors seem to have sparked fears about slowing demand growth, which have been one of the main bearish drivers in the market for a while," McGillian said.

Crude futures remain on course for their strongest monthly gains in more than two years following production cuts by the Organization of Petroleum Exporting Countries and its allies this month.

Brent has risen nearly 12 percent so far in January, which would be the largest monthly percentage increase since December 2016. WTI has risen more than 13 percent this month, the biggest jump since April 2016, when it surged almost 20 percent.

Investors have added to bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange. [O/ICE]

Much of the demand outlook hinges on China and whether its refiners will continue to import crude at 2018's breakneck pace.

Industrial companies in China reported a second monthly fall in earnings in December, despite the government's efforts to support borrowing and investment. [nL1N1ZS13G]

(Additional reporting by Amanda Cooper in London, Henning Gloystein and Roslan Khasawneh in Singapore; Editing by Marguerita Choy and Sonya Hepinstall)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.