Crude oil prices plummeted by more than 1% on Friday alluding to a weak global economic outlook after the warning of European Central Bank (ECB) on slow global economic growth and continued weakness. The ongoing sentiment was echoed by the fresh data showing less imports and and exports by China in the last month.
International benchmark Brent crude futures were at $65.42 per barrel at 0803 GMT, witnessing a 1.3% low as compared to its previous closing. The increased supply by United States is also unsettling the crude oil prices and market. While US West Texas Intermediate (WTI) crude futures were at $56.03 per barrel, 1.1% lower than its previous closing.
Europe’s economic weakness comes as growth in Asia is also slowing down. So far the demand for oil is high, especially in China which is still importing 10 million barrels per days.
On the other that is supply side, Crude oil has been receiving support from Oil and Petroleum Exporting Countries (OPEC). Along with some non-affiliated producers such as Russia, the producers have pledged to withhold around 1.2 million bpd of supply to tighten markets and prop up prices.
But this is negated by the surging high US oil production which has increased by more than 2 million bpd since early 2018.
Investment bank Jefferies on Friday said that “US output growth was largely being fueled by onshore shale production, which had recently benefited from investments by oil majors Exxon Mobil and Chevron.”
“The majors bring scale, steady capital investment and science to the play,” bank added.