20 January 2015 – Oil markets dipped on Tuesday as China’s economic growth for 2014 undershot a government target and hit its weakest annual expansion in 24 years, adding to worries in energy markets already suffering from slowing demand and oversupply.
The world’s second-largest economy grew 7.4% last year, China’s National Bureau of Statistics said, less than the target of 7.5%.
Growth in the fourth quarter held at its weakest in nearly six years, although coming in slightly better than expected at 7.3%.
Brent crude was trading at $48.71 per barrel early on Tuesday, down 13 cents since their last settlement, while US crude was trading down $1.32 at $47.37 a barrel.
Recent price falls have steepened the price difference between oil for immediate delivery and for barrels for supply at a later stage, known as a contango.
“Producers globally are struggling to find buyers for their crude, which is reflected in the contangos in the Brent and WTI futures curves,” Barclays said in a note.
Brent’s contango between deliveries in March this year and a year later is currently around $10 per barrel.
“Refiners will run any crude that is economically and technically possible to make a margin while margins are attractive (although product stocks are piling up),” Barclays said.
Additional crude is going into storage to be sold at higher prices in the future, the bank added.
Credit rating agency Moody’s said on Tuesday that the low oil prices could negatively affect South-East Asian exploration and production companies.