Oil slips after China reports slowest growth in 30 years

Seoul — Oil prices fell on Friday after China, the world’s largest oil importer, recorded its weakest quarter of economic growth in nearly three decades, dragged down by a trade dispute with the US.

Global benchmark Brent crude oil futures fell by 34c, 0.6%, to $59.57 a barrel by 3.50am GMT.

US West Texas Intermediate (WTI) crude futures were down 12c, or 0.2%, to $53.81 per barrel.

In the third quarter, China’s economic growth slowed to 6% year on year, its weakest pace in 27½ years and below expectations, dogged by soft factory production amid ongoing trade tensions with the US and sluggish domestic demand.

Crude demand growth tends to closely follow economic growth.

The slowing economic growth superseded China’s record refinery throughput in the minds of investors, as analysts expect there is little the world’s second-largest oil user can do to stimulate its economy.

Refinery throughput in September rose 9.4% from a year earlier to 56.49-million tons, on increases from new refineries and as some independent refiners resumed operations after maintenance.

Though China’s third-quarter GDP growth was slightly below expectations, Michael McCarthy, chief market strategist at CMC Markets in Sydney, said it was not “a shock to traders and oil trading volumes are low,” as the weak data had been expected.

Adding to the downward pressure, US crude oil stockpiles surged last week as refinery output dropped to a two-year low, while petrol and distillate fuel inventories decreased, the Energy Information Administration (EIA) said on Thursday.

“It’s a bit of a tough time for markets because we have questions about supply and demand. Last night’s EIA data was a bit of a surprise,” said McCarthy.

US crude inventories increased by 9.3-million barrels in the week ended October 11, compared with analysts’ expectations for an increase of 2.9-million barrels.

Elsewhere, the joint technical committee monitoring a global deal to cut output between the Organization of the Petroleum Exporting Countries (Opec) and partners, including Russia, found compliance with cuts for September stood at 236%, according to four Opec sources.

“Concerns about softer growth in the demand for oil and doubts about Opec’s ability to rebalance the market on the current production cut rate will be key drags on prices in the near term,” ANZ Research said in a note.

Opec and its allies have agreed to limit their oil production by 1.2-million barrels per day (bpd) until March 2020.

Opec lowered its 2019 global oil demand growth forecast to 0.98-million bpd, while leaving its 2020 demand growth estimate unchanged at 1.08-million bpd, according to Opec’s latest monthly report.

Reuters