Oil prices fell in early Asia trade Monday, dragged by weak Chinese manufacturing data and dimming prospects of a coordinated production cut by world’s dominant oil producers.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March traded at $32.93 a barrel, down $0.69 in the Globex electronic session. April Brent crude on London’s ICE Futures exchange fell $0.74 to $35.25 a barrel.
Last week, prices rose on speculation Russia and Saudi Arabia were considering output cuts to support prices. The gains soon evaporated after Organization of the Petroleum Exporting Countries officials refuted such claims.
Oil prices have been dogged by oversupply concerns for nearly two years as major producers continued pumping at high rates to protect market shares, causing prices to plummet by more than 70% from 2008 highs.
Prices also fell on disappointing Chinese manufacturing data. China’s statistics bureau reported Monday that the official manufacturing purchasing managers index fell to 49.4 in January from 49.7 in December, marking the lowest level since August 2012 and the sixth straight month of contraction.
China’s continuing slowdown has weighed on global oil demand. Last month, China said the country’s economy grew 6.9% in 2015, the slowest pace in 25 years. Still, some analysts say China’s crude imports could grow around 7% this year after 2015’s 8.8% growth, driven mostly by demand from local refiners and the government’s effort to stock up strategic reserves.
The collapse in oil prices has roiled many oil companies. Some 17 exploration-and-production companies have announced a combined 30% cut in their capital budgets in 2016 from 2015. Last week, Chevron Corp. said it would cut more jobs and capital spending after reporting a fourth-quarter loss of more than half a billion dollars.
Analysts say the current investment cuts are setting the stage for a gradual price rebound, but upsides will be capped by a stronger U.S. dollar and slowing global growth.
