Oil prices dip on Chinese, Russian data

A motorist filling up his vehicle at a petrol kiosk. (Photo: AFP/Federico Parra)

NEW YORK: Oil prices dropped on Monday (Nov 2) after data showed China's manufacturing output continued to contract and Russian oil production hit a new record high.

The weakening outlook for demand in China, the world's largest energy consumer, and the increased Russian production added to worries about the global oil oversupply that have pushed prices lower by more than 50 percent since mid-2014.

After three straight sessions of gains last week, US benchmark West Texas Intermediate for December closed at US$46.14 a barrel on the New York Mercantile Exchange, down 45 cents from Friday's settlement. Brent North Sea crude for delivery in December, the global oil benchmark, fell 77 cents to US$48.79 in London.

"It's just an overall oversupplied market with demand that is not really enough to get people excited," said Kyle Cooper at IAF Advisors.

China's official purchasing managers index for the manufacturing sector showed activity shrank in October for the third straight month.

"The Chinese PMI disappointed only slightly but that's enough to renew the bearish sentiment around the oilmarket," said John Kilduff at Again Capital.

Tim Evans of Citi Futures said there was "no urgency" to the selling on Monday despite the China and Russia news or Iran's moving closer to the lifting of international sanctions, which have hobbled its exports.

"A slowing economy in China and Iranian nuclear developments are apparently no longer news, at least as far as the oil market is concerned," Evans said. "We see a risky complacency regarding the ongoing physical surplus."

Russian oil production broke a post-Soviet record in October, climbing to 10.78 million barrels per day, according to Bloomberg News.

Although Saudi Arabia produced less last month, at around 10.1 million barrels a day, it remains the world's biggest exporter of crude.