Oil prices slid on Friday on jitters over demand from China after the world’s largest oil importer recorded its weakest quarter of economic growth in nearly three decades, dragged down by a trade dispute with the United States.
Global benchmark Brent crude oil futures fell by 21 cents, 0.4 per cent, to $59.70 a barrel by 06:46 GMT.
US West Texas Intermediate crude futures edged down by 4 cents, or 0.1 per cent, to $53.89 per barrel.
In the third quarter, China’s gross domestic product growth slowed to 6 per cent year-on-year, its weakest pace in 27.5 years and below expectations, dogged by soft factory production amid on-going trade tensions with United States and sluggish domestic demand.
‘The China GDP print has weighed on short-term sentiment and we have seen regional stock markets and oil contracts edge lower because of that,’ said Jeffrey Halley, senior market analyst for Asia Pacific at brokerage OANDA.
Crude demand growth tends to track economic growth trends, but Halley said China’s need for oil would not recede any time soon.
Underlining that view, Chinese official data released on Friday showed robust refinery throughput in September, rising 9.4 per cent from a year earlier to 56.49 million tonnes, on increases from new refineries and some independent refiners resuming operations after maintenance.
‘There’s a lot of demand pessimism already priced into the oil markets ... China GDP (growth) was not negative enough (below 6 per cent) to alter the positive effects for the trade talks,’ said Stephen Innes, Asia Pacific market strategist at AxiCorp.
US and Chinese trade negotiators are working on nailing down a phase 1 trade deal text for their presidents to sign next month, US treasury secretary Steven Mnuchin said on Wednesday.
Adding to the downward pressure, US crude oil stockpiles surged last week by 9.3 million barrels as refinery output dropped to a two-year low, while gasoline and distillate fuel inventories decreased, the Energy Information Administration said on Thursday.
Elsewhere, the joint technical committee monitoring a global deal to cut output between the Organisation of the Petroleum Exporting Countries and partners, including Russia, found compliance with cuts for September stood at 236 per cent, according to four OPEC sources.
‘Concerns about softer growth in the demand for oil and doubts about OPEC’s ability to rebalance the market on the current production cut rate will be key drags on prices in the near term,’ ANZ Research said in a note.
OPEC and its allies have agreed to limit their oil production by 1.2 million barrels per day until March 2020.
OPEC lowered its 2019 global oil demand growth forecast to 0.98 million bpd, while leaving its 2020 demand growth estimate unchanged at 1.08 million bpd, according to OPEC’s latest monthly report.
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