HOUSTON (Reuters) - Oil prices fell 3 percent on Tuesday over concerns the world’s stumbling economy could pinch fuel demand as U.S. crude output climbs to new heights and cuts by Saudi Arabia and its allies are smaller than advertised.
Gloomy new global growth forecasts by the International Monetary Fund and signs of a spreading slowdown in China weighed on crude prices as traders worried about supplies rising in 2019 despite lower prices.
Brent oil futures LCOc1 were down $1.82, or 2.9 percent, at $60.92 a barrel by 1:45 p.m. EST (1845 GMT). U.S. West Texas Intermediate (WTI) crude futures CLc1 fell $1.57, or 2.9 percent, to $52.23.
Data from Saudi Arabia on Monday showed its crude exports in November rose to 8.2 million barrels per day from 7.7 million bpd in October, as production climbed to 11.1 million bpd.
U.S. government data last week showed the nation’s crude production reached a record 11.9 million bpd.
“They weren’t expecting that (nearly 12 million bpd production record) for a few months,” said Tariq Zahir, managing member at Tyche Capital in New York. “We saw a very large drop in (U.S. oil drilling) rigs on Friday, but it comes down to whether Saudi Arabia is really going to do these cuts.”
Market concerns over the depth of production cuts by the Organization of Petroleum Exporting Countries and its allies, including Russia, were also driving prices lower on Tuesday, analysts said.
Russia’s Energy Minister Alexander Novak will not fly to Switzerland to attend the Davos world economic forum due to changes in his schedule, an energy ministry spokeswoman said.
Novak had previously said he would meet his Saudi counterpart Khalid al-Falih in Davos, if the minister were to attend.
Falih, who has criticized Russia’s output cuts as being slower than expected, was also unlikely to visit, according to a Bloomberg report.
“There’s speculation those two might not see eye to eye,” said Robert Yawger, director of energy futures at Mizuho in New York. “The Russians are not cutting with the same enthusiasm that the Saudis are.”
The United States has topped Russia and Saudi Arabia as the largest producer in the world, growing production by almost 2.4 million bpd over the past year, according to the U.S. Energy Information Administration.
Seventy percent of the senior energy industry executives plan to boost or maintain capital spending this year, compared with 39 percent in 2017, a survey by advisor DNV GL showed this week.
“Despite greater oil price volatility in recent months, our research shows that the sector appears confident in its ability to better cope with market instability and long-term lower oil and gas prices,” said Liv Hovem, who heads DNV’s oil and gas division.
The International Monetary Fund on Monday warned the risk of a pronounced global slowdown has risen because of constrained international trade, and it trimmed its 2019 global growth forecast to 3.5 percent, from 3.7 percent in last October’s outlook.
IMF Managing Director Christine Lagarde said in Davos that the slowing growth does not signal an impending recession, but said the risk of “a sharper decline” in global growth has increased.
China reported the lowest annual economic growth in nearly 30 years on Monday and its state planner warned on Tuesday that falling factory orders point to a further drop in activity and more job losses.
Singapore-based tanker brokerage Eastport said China’s slowing manufacturing activity is likely weighing on demand.
“There’s a lot of concern in the oil market about China’s weaker economic data,” said Phillip Streible, senior market strategist at RJO Futures. “It’s economic expansion is the weakest since 1990.”
China GDP growth vs oil & gas imports - tmsnrt.rs/2HpviiP
Reporting by Collin Eaton; Additional reporting by Noah Browning in London, Henning Gloystein in Singapore and by Colin Packham in Sydney; Editing by Marguerita Choy