Oil prices have declined by 1% in 2019’s first trading on Wednesday, due to an increase in US production and contraction of factory activity in China.
International Brent crude futures LCOc1 reduced by 61 cents, or 1.1% and traded at $53.19 a barrel, while West Texas Intermediate (WTI) futures CLc1 were at $44.95 a barrel, declining 47 cents, or 1%, Reuters reported.
According to traders, futures prices declined on expectations of oversupply amid surging output in the US and concerns regarding a global economic slowdown in China.
Following the Sino-US trade war and a slowdown in Chinese demand that affected production in several economies, factory activity across Asia weakened last month.
Independent market analyst Greg McKenna told the news agency that it was ‘difficult for traders and investors to ignore what looks like a genuine global economic slowdown’.
Rivkin Securities consultant Adeel Minhas said: “Oil prices registered their first yearly decline in three years on fears of a slowing global economy and concerns of an ongoing supply glut.”
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Based on a poll by Reuters, oil prices are expected to trade below $70 a barrel this year as surplus production and slowing economic growth undermine the Organisation of the Petroleum Exporting Countries’ (OPEC) efforts to reduce supply and increase prices.
Analysts said that the outlook for this year is challenged with uncertainty, including the US-China trade concerns and Brexit, in addition to political instability in the Middle East.