Oil prices fell 1 percent on Monday after U.S. companies added rigs for the first time this year, a signal that crude output may rise further, and as China, the world’s second-largest oil user, reported additional signs of an economic slowdown.
International Brent crude oil futures were at $60.74 a barrel at 0804 GMT, down 90 cents, or 1.46 percent.
U.S. crude oil futures were at $52.84 per barrel, down 85 cents, or 1.58 percent, from their last settlement.
High U.S. crude oil production, which rose to a record 11.9 million barrels per day (bpd) late last year, has been weighing on oil markets, traders said.
In a sign output could rise further, U.S. energy firms last week raised the number of rigs looking for new oil for the first time in 2019 to 862, an addition of 10 rigs, Baker Hughes energy services firm said in its weekly report on Friday.
Beyond oil supply, a key question for this year will be the magnitude of demand growth.
Oil consumption has been increasing steadily, and it will likely average above 100 million bpd for the first time ever in 2019, driven largely by a boom in China.
{{/usCountry}}Oil consumption has been increasing steadily, and it will likely average above 100 million bpd for the first time ever in 2019, driven largely by a boom in China.
{{/usCountry}}A global economic slowdown, however, amid a trade dispute between Washington and Beijing is weighing on fuel demand-growth expectations.
Earnings at China’s industrial firms shrank for a second straight month in December on sluggish factory activity, piling more pressure on the world’s second-largest economy, which reported its slowest pace of growth for last year since 1990.
“Persistent weakness seen in Chinese economic data has raised downside risks ... of lower crude oil imports by Beijing in 2019,” said Benjamin Lu of Singapore-based brokerage Phillip Futures.
China is trying to stem the slowdown with aggressive fiscal stimulus measures.
But there are concerns that these measures may not have the desired effect as China’s economy is already laden with massive debt and some of the bigger government spending measures may be of little real use.
The increased U.S. supply - the United States is now the world’s largest oil producer - and the economic slowdown are weighing on the oil price outlook.
“We expect U.S. crude oil prices to range between $50-$60 per barrel in 2019 and about $10 more per barrel for Brent,” Tortoise Capital Advisors said in its 2019 oil market outlook.
Tortoise added, though, that oil prices would be supported above $50 per barrel as it was “very clear that Saudi Arabia will no longer be willing to accept these lower oil prices.”
The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, started supply cuts late last year to tighten markets and buoy prices.