MARKET WATCH: Crude oil prices fall on slowing Chinese economic indicators

Jan. 15, 2019
The light, sweet crude oil price for February dropped more than $1 on the New York market Jan 14 to settle just above $50.50/bbl while Brent crude for March dropped nearly $1.50 to settle just under $59/bbl in London.

The light, sweet crude oil price for February dropped more than $1 on the New York market Jan 14 to settle just above $50.50/bbl while Brent crude for March dropped nearly $1.50 to settle just under $59/bbl in London.

Crude prices settled lower for a second consecutive trading session after having previously risen for nine consecutive sessions, marking their longest gain series since 2010.

Analysts attributed the Jan. 14 oil price drop to fears of a slowing Chinese economy, which could contribute to slowing world economic growth. Commerzbank noted an unexpected decline in Chinese imports and exports during December 2018.

“December saw Chinese trading activity decrease significantly as a result of the trade dispute with the US,” Commerzbank analysts said in a Jan. 14 research note. “Contrary to expectations, both imports and exports declined year-on-year.”

Goldman Sachs Investment Strategy Group issued a 2019 economic outlook saying that crude oversupply risks still linger despite some upside indicators for oil prices.

For 2019, Goldman Sachs expects oil prices will range $45-65/bbl “with a volatile path along the way as the tug-of-war between higher US output and lower OPEC production continues.”

The Organization of Petroleum Exporting Countries and some non-OPEC producers, including Russia, started implementing 1.2 million b/d in production cuts on Jan. 1 as agreed during a Dec. 7, 2018, meeting.

Energy prices

The February light, sweet crude contract on the New York Mercantile Exchange dropped $1.08 to settle at $50.51/bbl on Jan. 14 while the contract for March delivery fell $1.11 to settle at $50.80/bbl.

NYMEX natural gas for February rose 49¢ to close at $3.59/MMbtu on Jan. 14.

Ultralow-sulfur diesel for February was down 2.7¢ to a rounded $1.85/gal. The NYMEX reformulated gasoline blendstock for February declined by nearly 3.7¢ to a rounded $1.36/gal.

Brent crude for March dropped $1.49 to $58.99/bbl on London’s Intercontinental Exchange while the April contract fell $1.45 to settle at $59.18/bbl. The gas oil contract for February declined $1 to $567.50/tonne on Jan. 14.

The average price for OPEC’s basket of crudes was $58.39/bbl on Jan. 14, down $1.61.

Contact Paula Dittrick at [email protected].