SINGAPORE: Oil prices fell by 1 to 2 per cent on Thursday amid volatile currency and stock markets, and on concerns that an economic slowdown in 2019 will cut into fuel demand just as crude supplies are surging.
US West Texas Intermediate (WTI) crude oil futures dropped by 1.8 per cent, or 82 cents, from their last settlement to $45.72 by 07:39 GMT.
International Brent crude futures were down 1 per cent, or 53 cents, at $54.38 a barrel.
China’s Shanghai crude oil futures, launched only in March 2018, have since late last year established a slight but steady price premium over the Brent benchmark, last trading at 379.8 yuan ($55.24) per barrel.
In physical oil markets, top exporter Saudi Arabia is expected to cut February prices for heavier crude grades sold to Asia by up to 50 cents a barrel due to weaker fuel oil margins, respondents to a Reuters survey said on Thursday.
“Fears of future economic and earnings growth continue to be the main driver in causing market jitters,” said Singapore-based brokerage Phillip Futures said.
Markets were roiled by a more than 3 per cent slump of the US dollar against the Japanese yen overnight, and after tech giant Apple cut its sales forecast.
“We did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple chief executive Tim Cook said.
The slowdown in China and turmoil in stock and currency markets is making investors nervous, including in oil markets.
Slowing economic growth would have a negative effect on oil prices as markets eye the potential for softer petroleum demand, Phillip Futures said. Jefferies Financial Group wrote in a note to clients and employees that the start of the year was a period of “extreme disarray” and that “the future doesn’t feel as certain and optimistic, and the path forward does not seem as clear.”
Although the investment bank pointed out that especially the US economy was “still in a good place”, it added that the Sino-American “trade war has become an impediment” and that “markets are extremely volatile and virtually impossible to anticipate or navigate.” — Reuters
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