Oil falls on China concerns, down 3 percent for the week on OPEC doubts

Fri Jan 13, 2017 3:01pm EST
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By Devika Krishna Kumar

NEW YORK (Reuters) - Oil prices fell on Friday and ended the week 3 percent lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of the world's second-largest oil consumer, China, after it reported the steepest falls in overall exports since 2009.

Record Chinese crude imports of 8.6 million barrels per day (bpd) in December helped to buoy prices somewhat, traders said, but they could not hide underlying fears over the overall health of the world's second-biggest economy.

Brent crude futures LCOc1 settled 56 cents lower at $55.45 a barrel, ending the week with a loss of about 3 percent.

U.S. West Texas Intermediate CLc1 crude futures fell by 64 cents to close at $52.37 also notching a weekly drop of nearly 3 percent.

"China right now seems more interested in keeping capital in the country than focusing on growth overall," Phil Flynn, analyst at Price Futures Group in Chicago said.

"We have to watch this situation develop because this is one threat to what is an otherwise wildly bullish scenario for oil in the coming year."

On the supply side, there was some market support from top crude exporter Saudi Arabia, which said that its output had fallen below 10 million bpd to levels last seen in February 2015 and that it expects to make even deeper cuts next month.

However, hard evidence of export reductions has yet to emerge, two weeks into the month in which the cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, such as Russia, were supposed to start.   Continued...

A pumpjack drills for oil in the Monterey Shale, California, April 29, 2013. REUTERS/Lucy Nicholson