19 January 2015, News Wires – Brent crude oil prices fell below $50 a barrel on Monday after the global economic outlook darkened and Iraq announced record oil production.
The world’s biggest energy consumer, China, faces significant downward pressure on its economy, its premier Li Keqiang was quoted by state radio as saying on Monday.
China is expected this week to report growth slowing to 7.2% from a year ago, the weakest since the depths of the last global economic crisis. Data from China’s National Bureau of Statistics showed on Sunday house prices fell for a fourth straight month.
Brent crude traded at $49.42 a barrel by 1445 GMT, down 75 cents. US crude was down 84 cents at $47.85 a barrel.
Oil prices have dropped by more than half since last June as output around the world soared while demand growth slowed. Although the International Energy Agency (IEA) said last week a reversal in the trend was possible this year, it added that prices may fall further before rising.
“There’s still more supply than demand and that’s a situation that will not change in just a few weeks,” said Hans van Cleef, energy economist at ABN Amro.
Iraq pumped 4 million barrels per day (bpd) of oil in December, Oil Minister Adel Abdel Mehdi said on Sunday, the country’s highest ever thanks to higher output from its southern terminals and a surge in supply from the north.
Iran’s oil minister said on Monday consultations with other Organisation of the Petroleum Exporting Countries (OPEC) members to stop oil prices falling had yet to bear fruit, but Tehran had no plans to call an emergency OPEC meeting to discuss prices.
Zanganeh said Iran could live with even lower prices.
“Even if the oil price goes down to $25 a barrel, the oil industry will not be threatened,” the Fars news agency quoted Zanganeh as saying.
Analysts said prices found some support from a drop in US drilling rigs, signifying a likely fall in production in the future. But they said there was not much room for gains.
“It is not hard to find evidence of increasing concerns around global economic weakness. Yield curves across the world have been flattening (longer term yields falling relative to short ones), a dynamic typically associated with expectations of weakening economic conditions,” Timera Energy said on Monday.