Oil kicks off 2019 with losses on signs of surging supply

The outlook for 2019 is riddled with uncertainty also due to US-China trade concerns, Brexit

Photo: EPA A view of the Jordan Petroleum Refinery, at Zarqa

Oil markets dropped by around 1 percent in 2019’s first trading on Wednesday, pulled down by surging US output and concerns about an economic slowdown in 2019 as factory activity in China, the world’s biggest oil importer, contracted. International Brent crude futures LCOc1 were at $53.19 per barrel at 0544 GMT, down 61 cents, or 1.1 percent, from their final close of 2018.

West Texas Intermediate (WTI) futures CLc1 were at $44.95 per barrel, down 47 cents, or 1 percent. In physical oil markets, Dubai crude averaged $57.318 a barrel for December, the lowest since October 2017. Similarly, Malaysia’s Petronas set the official selling price of a basket of December-loading Malaysian crude grades at $62.79 a barrel - also marking the lowest since October 2017.

Traders said futures prices fell on expectations of oversupply amid surging US production and concerns about a global economic slowdown after factory activity weakened in December across Asia, including in China, pointing to a rocky start for the world’s top economic growth region in 2019. The outlook for 2019 is riddled with uncertainty also due to Brexit, as well as political instability and conflict in the Middle East.

That is also impacting sentiment in oil markets. Oil prices ended 2018 lower for the first time since 2015, after a desultory fourth quarter that saw buyers flee the market over growing worries about too much supply and mixed signals related to renewed US sanctions on Iran.

“Oil prices ... registered their first yearly decline in three years on fears of a slowing global economy and concerns of an ongoing supply glut,” said Adeel Minhas, a consultant at Australia’s Rivkin Securities.

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