By Henning Gloystein and Dmitry Zhdannikov
SINGAPORE/LONDON (Reuters) – Oil prices dropped more than 3 percent on Friday on a worsening economic outlook after the European Central Bank warned of continued weakness and fresh data showed U.S. job growth almost stalled in February.
With surging U.S. oil supply also unsettling markets, international benchmark futures lost $2.18, or 3.4 percent, to $64.12 a barrel as of 1411 GMT.
U.S. West Texas Intermediate crude futures were down $1.85, or 3.4 percent, at $54.82.
Financial markets took a hit after comments on Thursday from ECB President Mario Draghi, saying the European economy was in “a period of continued weakness and pervasive uncertainty”.
U.S. job growth almost stalled in February, with the economy creating only 20,000 jobs amid a contraction in payrolls in construction and several other sectors.
The European and U.S. economic weakness comes as growth in Asia is also slowing.
So far oil demand has held up, especially in China, where imports of crude remain above 10 million barrels per day (bpd). Yet a slowdown in economic growth is likely to dent fuel consumption and pressure prices at some point.
China’s dollar-denominated February exports fell 21 percent from a year earlier, representing the biggest drop in three years and far worse than analysts had expected, while imports dropped 5.2 percent.
On the supply side, oil has received support this year from output cuts led by the Organization of the Petroleum Exporting Countries.
But these efforts are being undermined by soaring production, which has increased by more than 2 million bpd since early 2018 to an unprecedented 12.1 million bpd. That makes America the world’s biggest producer, ahead of Russia and Saudi Arabia.
Investment bank Jefferies on Friday said U.S. output growth was largely being fueled by onshore shale production, which had recently benefited from investments by Exxon Mobil (NYSE:) and Chevron (NYSE:).
“The majors bring scale, steady capital investment and science to the play,” the U.S. bank said, adding that this could lead to a higher growth trajectory and cap oil prices.
(GRAPHIC: Russian, U.S. & Saudi crude oil production link: https://tmsnrt.rs/2EUHeFO).
TOP OIL EXPORTER?
U.S. crude exports have also been chasing records, reaching 3.6 million bpd in February – more than the production of OPEC members such as the United Arab Emirates, Kuwait and Iran.
“The United States will soon export more oil and liquids than Saudi Arabia,” consultancy Rystad Energy said this week.
Norway’s trillion-dollar sovereign wealth fund, the world’s biggest, will sell stakes in oil and gas explorers and producers but still invest in the largest energy firms.
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Source: Investing.com
