Oil prices fell in Asian trade Monday morning, after US energy companies added rigs for the first time this year as a sign that crude oil production will rise further.
US crude oil futures were at 53.37 dollars per barrel at 00:27 GMT, down 32 US cents, or 0.6 percent, from their last close. While international crude oil Brent was at 61.37 dollars per barrel, down 27 US cents, or 0.4 percent.
Analysts say high US crude oil production, which reached a record 11.9 million barrels per day (bpd) late last year, has weighed on the oil market.
In a sign that production could rise further, US energy companies last week raised the number of rigs seeking new oil for the first time in 2019, adding 10 facilities, to 862 unit rigs, energy services company Baker Hughes said in its weekly report on Friday (25 / 1).
Beyond oil supply, the key question for this year is demand growth. Oil consumption has steadily increased, possibly averaging above 100 million barrels per day for the first time in 2019, largely driven by an explosion in China.
However, the economic slowdown amid a trade dispute between Washington and Beijing has also weighed on growth expectations for fuel demand.
China, which recorded the slowest economic growth rate since 1990 last year, is trying to stem the slowdown with aggressive fiscal stimulus measures.
But there are fears that these steps may not have the full desired impact, because China’s economy is already laden with large debts and some of the larger measures of government spending can be seen only a few are actually used.
High supply and economic slowdown weighed on the outlook for oil prices. “We expect US crude oil prices to range between 50-60 dollars per barrel in 2019 and around 10 dollars more per barrel for Brent,” Tortoise of Capital Advisors said in the outlook for the 2019 oil market, as quoted by Reuters.
However, Tortoise added that oil prices would be supported above 50 dollars per barrel because “it is very clear that Saudi Arabia will no longer want to accept lower oil prices”.
The Organization of Petroleum Exporting Countries (OPEC), which was de facto led by Saudi Arabia, began reducing supplies at the end of last year to tighten markets and raise prices.