LONDON (Reuters) - Oil fell more than 3 percent on Monday, hit by weaker Chinese equities and record North Sea crude production data that added to global oversupply concerns.
China’s main indexes closed down on Monday as investors sold shares in the aftermath of a four-day market holiday, during which further restrictions on futures trading were announced.
“Oil is only taking its cues from China,” SEB chief commodity analyst Bjarne Schieldrop said.
“The price is taking little notice of constructive data like stronger (European) equities, stronger base metals and last Friday’s fall in U.S. rig count,” he said.
Brent LCOc1 futures contracts for October fell $1.98 to settle at $47.76 a barrel, a 3.73 percent loss. U.S. crude CLc1 fell $1.80 to $44.25 per barrel by 2:48PM EST (1848 GMT), with trading volume of around 75,000 lots less than one-quarter the norm due to the U.S. Labor Day holiday.
Oil has fallen almost 60 percent since June 2014 on a global supply glut, with prices seesawing in recent weeks as concerns about a slowing Chinese economy caused turmoil in global stock markets.
“For commodities, the key demand-side figure to care about is not China’s GDP growing at 7 percent instead of 9 or 10 percent, it is the manufacturing price index, which has been falling for more than 40 months in a row,” JBC Energy said.
The Organization of the Petroleum Exporting Countries is producing close to record volumes to squeeze out competition, especially from U.S. shale producers, which have so far weathered the price plunges to keep pumping oil.
Saudi Arabia is set to maintain output at around 10.2 million to 10.3 million barrels per day, near this summer’s record high, in the fourth quarter as rising refinery demand offsets lower local use for power, according to industry sources.
“The focus is shifting back to the still-high oversupply,” Commerzbank senior oil analyst Carsten Fritsch said.
In the short term, supply will swell further from the North Sea, where crude output tracked by Reuters will rise to its highest in just over two years in October, according to loading schedules, adding to ample Atlantic Basin supplies. [O/LOAD]
Despite this production spike, the year-long decline in oil prices has caused more than 5,000 job losses in Britain’s North Sea oil and gas sector since late last year, the country’s Oil and Gas Authority said on Monday.
Additional reporting by Keith Wallis in Singapore; Editing by William Hardy and Cynthia Osterman