Brent
oil prices dip on weaker China data
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[September 14, 2015]
By Lisa Barrington
LONDON (Reuters) - Brent crude oil fell on
Monday as weaker-than-expected Chinese data weighed on markets, adding
to concerns that declining global demand would exacerbate a surplus of
crude.
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Traders also waited to see whether the U.S. central bank raises
interest rates for the first time in nearly a decade later this
week.
Should interest rates rise, analysts expect oil to fall as a
stronger dollar would undermine demand from importing countries.
Oil prices have fallen almost 60 percent since June 2014 on the
largest global surplus in modern times and concerns about a slowing
Chinese economy.
Growth in China's investment and factory output missed forecasts in
August. A recent run of weak data from the world's second-largest
economy has raised the chances that third-quarter economic growth
may dip below 7 percent for the first time since the financial
crisis.
"There has been a very broad-based reaction to China across
commodities, industrial metals and equities," SEB chief commodities
analyst Bjarne Schieldrop said.
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Front-month Brent crude futures were down 38 cents at $47.76 a
barrel by 0940 GMT.
U.S. crude futures were flat at $44.63 a barrel.
Barclays expects the spread between U.S. crude and Brent to narrow
further from current levels, noting that "relative performance
versus Brent continues to improve".
The International Energy Agency said last week that ongoing
production cuts would lead to a rebalancing of the oil market by
next year.
The U.S. oil rig count fell by 10 to 652 last week, the second
straight weekly drop.
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Yet several banks said the immediate outlook remained weak, with
Goldman Sachs and Commerzbank cutting their oil price forecasts last
week.
Morgan Stanley said on Monday: "Both the supply and demand pictures
look less favorable over the coming months ... Outside the U.S., oil
fundamentals appear to be slipping seasonally."
Barclays said: "Most producers seem to be coming around to the fact
that 2016 oil and gas prices are unlikely to see a significant
recovery."
Macquarie noted that global auto sales, which fell 1 percent in
August and 0.8 percent in July, were dragging on demand.
Kuwait and Iran have cut their crude prices to Asia to multi-year
lows against top exporter Saudi Arabia as the battle for market
share pits members of the Organization of the Petroleum Exporting
Countries against each other.
OPEC's monthly market report will be published later on Monday.
(Additional reporting by Henning Gloystein in Singapore; Editing by
Dale Hudson and William Hardy)
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