Oil prices have declined due to traders’ concerns that the global economic slowdown will weigh on future oil demand growth.
Brent crude futures edged down $0.28 to $58.09 a barrel, while US West Texas Intermediate (WTI) crude was at $52.64, down $0.17, reported Reuters. Both contracts ended last week representing nearly 5% decline post dismal manufacturing data from the two nations, US and China.
On the supply front, Saudi Arabia is producing more than expected after a terror attack on production facilities, leading to downward pressure on oil prices.
AxiCorp Asia Pacific market strategist Stephen Innes was quoted by Reuters as saying: “The macro headwinds outweigh supply concerns for oil now, despite tensions in the Middle East and a reduced spare capacity pillow.”
Eurasia Group Middle East and North Africa practice head Ayham Kamel said in a note that Saudi oil production is currently close to 9.9 million bpd, but it is not clear that the capacity is fully operational at 11.3 million bpd.
Kamel added that Iraq’s oil exports of 3.43 million barrels per day (bpd) of oil from Basra terminals are expected to be disturbed if instability continues.
Deadly anti-government unrest in Iraq is posing the biggest security and political challenge so far to Prime Minister Adel Abdul Mahdi’s government. The protests have claimed the lives of more than 100 people.
China’s CNOOC spokesman said that the Buzzard oil field in the UK has been closed to carry out pipe repair work. The field is a major contributor to the Forties crude stream, which is the largest of the five North Sea oil grades underpinning Brent crude futures.