Oil prices slide over Chinese demand concerns

Prices slide as figures show factory activity dipped for an eighth straight month

PUBLISHED : Tuesday, 03 November, 2015, 1:51am
UPDATED : Tuesday, 03 November, 2015, 1:51am

Oil prices fell on Monday as weak Chinese economic data fuelled concerns about demand slowing in one of the world's largest oil-consuming nations, while record-high production in Russia exacerbated the global glut.

Brent crude futures, the global benchmark, traded down 55 cents at US$49.01 a barrel. US futures were trading at US$45.95 a barrel, down 64 US cents on Friday's close.

"High Opec production, record-high production in Russia and weak China data are driving prices lower," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.

China's factory activity fell for an eighth straight month in October, a survey showed, pointing at continued sluggishness in the world's second-largest economy.

The global oil supply glut, which has more than halved oil prices since a peak in June last year, was underscored on Monday when Russia reported that its October oil production hit a post-Soviet record of 10.78 million barrels per day.

The data confirmed Russia's strategy to defend its market share in the face of rivals from the Gulf starting to supply Moscow's traditional markets.

Last week, a survey showed sector analysts expected oil prices to remain weak next year as oil-producers' cartel, the Organisation of Petroleum Exporting Countries, is likely to stick to its stance of maintaining record-high production when it meets on December 4.

In the US, the oil rig count dropped to its lowest since June 2010, data showed on Friday, adding to speculation that domestic crude production will fall in the coming months, providing possible respite for oil prices.

"It will still take a great deal of time to undermine the massive surplus in crude oil inventories," said Martin King, an analyst at FirstEnergy Capital.

"As such, it is going to take a good deal of time for crude oil prices to march steadily higher, but the foundations are now more firmly in place."