Oil prices fall 5% on China data, OPEC uncertainty
February 1, 2016, 5:50 pm    

Oil fell about 5 percent on Monday as weak economic data from China, the world`s largest energy consumer, weighed on prices and an OPEC source played down talk of an emergency meeting to stem the decline.

China`s manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world`s second-biggest economy at a time when the market is already weighed down by a large supply overhang.

"The weak China PMI (purchasing managers index) is driving down prices because China weighs on the entire commodities sector from the demand side of the equation," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

Brent April crude futures were down $1.44, or 4 percent, at $34.55 a barrel at 10:52 a.m. ET (1552 GMT). The March Brent contract, which expired on Friday, settled at $34.74 a barrel.

U.S. West Texas Intermediate was down $1.67, or 5 percent, at $31.95 a barrel.

A senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC).

Oil prices jumped last week after Russian energy officials said they had received proposals from OPEC lynchpin Saudi Arabia on managing output and were ready to talk.

"We do not expect such a cut will occur unless global growth weakens sharply from current levels, which is not our economists` forecast," investment bank Goldman Sachs said in a report.

OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts.

Partly because of Iran`s return, OPEC production has jumped to 32.60 million barrels per day (bpd), its highest in years, adding to a global glut of over 1 million bpd in excess of demand, which has pulled down oil prices 70 percent since mid-2014. 

Oil exports from OPEC member Iraq rose in January, its oil ministry said on Monday, reaching an average of 3.285 million bpd, up from 3.215 million bpd the previous month.

However overall production from its southern fields fell last month, slipping from a record high reached at the end of last year.

BMI Research has cut its oil price outlook for Brent to a 2016 average of $40 per barrel from $42.50 previously, and said WTI would average $39.50.

"Counteracting oil`s upside momentum in 2016 will be the weakness of the Chinese yuan, lingering concerns over global economic growth and the well-stocked inventories of crude and fuels," BMI said, adding that a gradual price rise was expected in the second half of the year.

In a sign investors are speculating on an oil rebound, data from the InterContinental Exchange showed net long positions in Brent rose the most in four years last week.

"Part of the bullish action in Brent crude oil ... is from fundamentals in Asia where parts of the oil complex are supportive with very strong China imports of NGL (natural gas liquids) and Naphtha, which has put these products in backwardation both in Asia and in Europe," said Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo.


m1.png m2.png m3.png m4.png m5.png
f1.png f2.png f3.png f4.png f5.png
+ =
Latest Videos
VIDEO: The Biology of Bliss and the Human OS - Jamie Wheal
Terror and Tourism: Changing the Travel Landscape
Earth In 2050 - HD Documentary 2015
The drive for gender equality in corporate Japan
Plane touches down then aborts during storm (VIDEO)
The Fermi Paradox II — Solutions and Ideas – Where Are All The Aliens (VIDEO)
Money Survival Tips for Millennials (VIDEO)
Lightning strike explodes a tree (VIDEO)
Latest Photos
best cities for small businesses
Best Jobs in America (PHOTOS)
Inside the coolest private jets (PHOTOS)
The best hotel club floors in the world
Winning Images from the 2015 National Geographic Traveler Photo Contest
PHOTOS: Raging Wildfires Prompt Major Evacuation
Amazing Geometry Cities from air - Photos
Photos Bangkok Get snow - Opens Snow Village