Brent and U.S. crude futures both fell more than $1 on Friday after data showing U.S. non-farm payrolls rose by 142,000 in August, well below a forecast 225,000, casting doubt on the pace of growth in the world’s biggest oil-consuming economy.
On Monday, brent hit $99.72 a barrel to record its lowest level since June 24, 2013 after coming under pressure in recent weeks also from easing demand growth expectations. West Texas Intermediate prices hit a session low of $92.11 earlier, a level not seen since January 14.
Participants in the market are concerned about the slowdown of Chinese imports. “China’s slowing imports this morning did not help lift concerns. The Atlantic basin supply glut is still in place,” Andrey Kryuchenkov, an analyst at VTB Capital in London said, as reported by Bloomberg.
China, the second largest oil consumer in the world, has reduced its year-on-year imports by 2.4 percent in August against a 1.6 percent drop in July, as reported by Chinese customs service. The export price index increased by 9.4 percent in August.
“The export figure is pretty close to expectations so there is not much impact, although it’s a bit of a relief to see figures come in in-line. The greatest risk was to the downside. It’s pretty neutral to the oil market overall,” Spooner said.
China imported 25.19 million tonnes of crude oil in August, up 6.0 percent from 23.76 million the previous month, according to data from China’s General Administration of Customs. Imports of oil products rose 36.0 percent to 2.53 million tonnes while exports of oil products rose 18.2 percent to 2.73 million tonnes.
“It’s not the best start to the week on the economic data front,” said Matt Smith, an analyst with Schneider Electric.
Chinese import data were poor and the Japanese economy contracted an annualized 7.1% in Q2, slightly more than expected.
A stronger dollar also contributed to the declines. The dollar was stronger versus the pound as the British currency stumbled after poll results showed pro Scotland-independence voters taking the lead for the first time since the referendum campaign started.
The price fall also puts pressure on exporters’ budgets. Russia, the target of Western sanctions for its role in the Ukraine crisis, relies on oil and gas for around half of federal budget revenues, while more than half of OPEC producers can’t balance their books at current prices. Oil prices are now too low for many OPEC countries to cover all their spending needs, analysts and economists say.
Opec sources said the group sees the fall below $100 as short term. Saudi Arabia and other Opec members have previously said they prefer oil above $100.
“The fall in prices is a temporary thing. They are still within the acceptable range,” an Opec delegate from a Gulf country said. “We are now approaching winter so the prices are expected to rise,” said the delegate, who declined to be identified.
Libya, which holds Africa’s biggest proven crude reserves, is pumping 740,000 barrels a day, National Oil Corp. spokesman Mohamed Elharari said by phone from Tripoli on Monday. That compares with a monthly average of 400,000 a day in July. The country produces light, sweet crude that’s similar in quality to Brent. “The recovery in Libyan production is the number one reason for Brent’s decline,” said Sarah Emerson, managing principal of ESAI Energy Inc. “There is more than enough light, sweet crude around.”
“Saudi Arabia and the other members of OPEC are going to have to examine the current market balance and decide on whether they want to take any action,” Michael Cohen, an analyst at Barclays Plc in New York, said by phone.