Oil prices slide on China worries, supply glut
LONDON, November 27, 2015
Crude oil futures fell on Friday, bringing losses this month to close to nine per cent, as disappointing Chinese data and worries over a supply glut overshadowed geopolitical concerns.
The US dollar, which stood close to nine-month highs versus a basket of other currencies, also weighed on oil. Strength in the greenback makes oil more expensive for holders of other currencies.
Brent crude fell by 60 cents to $44.86 per barrel by 1007 GMT, after settling down 71 cents at $45.46 in the previous session.
West Texas Intermediate (WTI) futures, the US crude benchmark, fell by $1 to $42.04 per barrel.
Both crude contracts were on track for small weekly gains, but were down by roughly nine per cent since the beginning of November.
"The Chinese statistics this morning are weighing," said Bjarne Schieldrop, chief commodities analyst at SEB in Oslo.
Profits earned by Chinese industrial companies fell 4.6 per cent in October from a year earlier, data from the country's statistics bureau showed on Friday. A potential regulatory crackdown was also looming.
Worrying economic indications in the world's largest energy consumer typically filter quickly to oil prices, particularly given the nagging global surplus of physical oil.
But Schieldrop added that the shooting down of a Russian jet by the Turkish military this week had also morphed from a geopolitical risk concern into worries about falling oil demand due to potential economic sanctions.
"Rather than being bullish...it's now bearish for marginal demand," Schieldrop said.
Russia threatened economic retaliation against Turkey on Thursday and said it was still awaiting a reasonable explanation, but Turkey dismissed the threats as "emotional" and "unfitting.”
The market is also shifting its focus to a meeting of ministers from the Organization of the Petroleum Exporting Countries (Opec), which is set for Vienna on December 4. Thus far, market observers say that the group is determined to keep pumping oil vigorously despite the resulting financial strain. Still, some say a change could come.
"Although we continue to believe that this would be a non-event, the willingness of Saudi Arabia to cooperate seems to be stronger this time around. Thus, the outcome of the meeting could be a surprising one," Daniel Ang at Phillip Capital said.
Russian Energy Minister Alexander Novak said on Thursday that Russia and Saudi Arabia would set up a special joint working group on oil and gas cooperation to promote energy dialogue between the world's top oil producers. - Reuters
