Oil prices dropped on Friday as clouds gathered over the global economy after the European Central Bank (ECB) warned overnight of continued weakness and fresh data showed Chinese exports and imports slumped last month.
With surging U.S. supply also unsettling markets, international benchmark Brent crude futures were at 65.78 dollars per barrel at 0528 GMT, down 52 cents, or 0.8 per cent from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at 56.25 dollars per barrel, down 41 cents, or 0.7 per cent.
Financial markets, including crude oil futures, took a hit after ECB President Mario Draghi said on Thursday the economy was in “a period of continued weakness and pervasive uncertainty”.
Europe’s economic weakness comes as growth in Asia is also slowing down.
So far oil demand has held up, especially in China where imports of crude remain above 10 million barrels per day (bpd).
Yet a slowdown in economic growth will at some point likely dent fuel demand, putting pressure prices.
China’s February dollar-denominated exports fell 21 per cent from a year earlier, coming in far worse than analysts’ expectations, while imports dropped 5.2 per cent, official data showed on Friday.
On the supply side, prices have been receiving support this year from output cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
Together with some non-affiliated producers like Russia, the producer group has pledged to withhold around 1.2 million barrels per day (bpd) of supply to tighten markets and prop up prices.
But these efforts are being undermined by soaring U.S. crude oil production, which has increased by more than 2 million bpd since early 2018, to an unprecedented 12.1 million bpd.
That makes America the world’s biggest producer, ahead of Russia and Saudi Arabia.
Investment bank Jefferies said on Friday that U.S. output growth was largely being fueled by onshore shale production, which had recently benefited from an expansion driven by investments from oil majors Exxon Mobil and Chevron.
“The majors bring scale, steady capital investment and science to the play and could lead the basin to a higher growth trajectory – which in turn could cap the upside in oil prices,” the U.S. bank said.
U.S. crude exports have also been chasing new records, reaching 3.6 million bpd in February – more than OPEC members like the United Arab Emirates, Kuwait or Iran produce.
“The United States will soon export more oil and liquids than Saudi Arabia,” consultancy Rystad Energy said this week. Liquids include non-crude oil products like Natural Gas Liquids (NGLs).
“The (Saudi) kingdom currently exports some seven million bpd of crude oil plus about two million bpd of NGLs and petroleum products, compared with the U.S. now exporting approximately three million bpd of crude oil and five million barrels of NGLs and petroleum products,” Rystad said.
The consultancy said “U.S. oil production…will grow by close to another 1 million bpd in 2019.”
Rystad said this export surge would have huge benefits for the U.S. economy.
“The U.S. trade deficit will evaporate, and its foreign debt will be paid quickly thanks to the swift rise of American oil and gas net exports,” said Rystad Energy senior partner Per Magnus Nysveen.
Road Mishap Kills 9, Injures 12 Others
Iran Frees British-Flagged Oil Tanker
El-Rufa’i Keeps Promise, Enrols Son In Public Primary School
Fire Guts Unity Bank Head Office
Nestlé Nigeria, Wecylers To Tackle Plastic Waste Pollution In Lagos
Empowering Women and Reducing Poverty Through Family Planning
Son Shoots Father Dead During Boar Hunt
NEWS9 hours ago
Missing Navy Commander’s Body Found In Shallow Well In Kaduna
NEWS22 hours ago
Polygamy: Multiple Wives Will Make You Poorer, Emir Warns
BUSINESS8 hours ago
Dangote Foundation Empowers 106,000 Women With N1.1bn
NEWS16 hours ago
Mystery As Thunder Storm Kills 36 Cows In Ondo Community
NEWS21 hours ago
Gov. Bello Tasks Kogi Youths On Skills Acquisition For Self-Reliance
FEATURES17 hours ago
Nigeria’s Auto Policy And Challenges Of Electric Car Evolution
NEWS21 hours ago
Reps Urge PMB To Give Sovereign Guarantee For Bakassi Deep Seaport Project
Tribute21 hours ago
Tribute Prince Tonye Princewill Bids Farewell To Sister.