Chinese economic data underpins demand hopes
LONDON: Crude oil recouped earlier losses on Monday in subdued trading, but signs that the US is continuing to add output largely counteracted strong economic growth in China and efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production.
Benchmark Brent crude futures were down 14 cents at $55.75 at 1350 GMT, after trading as much as 58 cents lower. US West Texas Intermediate (WTI) crude futures were down 14 cents at $53.04 a barrel, after falling by as much as 55 cents earlier in the day.
Both benchmarks rose last week for a third consecutive week and were trading close to 12 percent above their 2017 lows. Speculators in the week to April 11 also increased their bets on bullish performance in both contracts.
But in thin trading due to holidays across Europe, the focus was on indications that shale oil output in the US was creeping higher.
“All the signs of an ever-growing bull market are starting to fade away, (with) Libya and geopolitical tensions easing, but also because the Texans are back and they are pumping like there is no tomorrow,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai. “If I were OPEC, I would be pretty worried.”
Although the failure of a ballistic missile launch in North Korea brought some respite, markets were braced for further tensions in the region.
In Libya, fighting between rival factions has cut oil output, but the National Oil Corporation (NOC) was able to reopen at least one field and was pushing to reopen another.
US drillers last week added rigs for a 13th straight week, bringing it to its highest in roughly two years. Investors are also pouring money into the industry, suggesting US output gains will continue.
Increasing US output is undermining attempts by OPEC and other major oil producers to curb output and sustain a price rally in a market that has been oversupplied since mid-2014. While Iran fueled hopes that OPEC and nonOPEC oil producers could extend their output cuts beyond the sixmonth agreement, Saudi Energy Minister Khalid Al-Falih said it was too early to discuss an extension.
US crude oil production reached 9.24 million barrels per day (bpd), according to the latest Energy Information Administration (EIA) data, making it the world’s thirdlargest producer after Russia and Saudi Arabia.
The increasing production largely counteracted figures showing first-quarter economic growth of 6.9 percent in China. Forecastbeating March investment, retail sales and exports all suggested China’s economy, the world’s second-largest oil consumer, may carry solid momentum into spring.
China’s March refinery throughput also rose to 11.19 million bpd, just shy of December’s record, as margins remained attractive.