Oil prices were pretty steady on Monday after plunging 2 percent in the previous session, but were still under pressure amid weaker growth in major economies and concerns about oversupply.
International Brent crude oil futures were at $60.33 per barrel, higher 5 cents, or 0.08 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $1.33 per barrel, higher 13 cents, or 0.25 percent.
Persistent growth in the US shale out continues to weigh on oil prices, while some analysts casted doubts that planned supply cuts led by the Organization of the Petroleum Exporting Countries would be enough to rebalance the markets.
“I don’t believe OPEC cuts will work this time around with Qatar going out and Iran refusing to cut, while there’s a big question mark when Russia will go to its agreed level,” said Sukrit Vijayakar, who is the director of oil consultancy Trifecta. “Meanwhile, US production will go on increasing. So the whole load effectively be on Saudi Arabia, who is under severe pressure from Trump anyway.”
OPEC and its Russia-headed allies have agreed to curb output from January, in a move to be reviewed at a meeting in April. Saudi Arabia is OPEC’s de facto leader.
Meanwhile, worsening worries about weakening growth in major markets such as China and Europe also dampened the mood in oil and other asset classes.
Chinese oil refinery throughout in November slipped from October, indicating a retreat in oil demand, while the country’s industrial output gained the least in almost three years as the economy continued to lose momentum.
French business activity plummeted unexpectedly into contraction this month, retreating at the fastest pace in more than four years, while Germany’s private sector expansion slowed to a four-year low in December.
However, oil prices were supported after General Electric Co’s Baker Hughes energy services firm said on Friday that the US drillers cut four oil rigs in the week to December 14, pulling the total count to the lowest since mid-October at 873.
On the other hand, the current US rig count, which serves as an early indicator of future output, is higher than a year ago when747 rigs were active.
“Oil is finding support as the drop in Baker Hughes rig counts points to a near-term slowdown in US production,” said Stephen Innes, who is the head of trading for APAC at futures brokerage Oanda. “This, when combined with expectations Saudi Arabia…is to cut exports to the US to draw down inventory builds (there) should provide a short-term base despite global slowdown fears, which continue to resonate.”
“The potential for a significant movement in the US dollar clearly has an impact on oil pricing with the Fed meeting (meeting week),” said Michael McCarthy, who is chief markets strategist at CMC markets. “We’re looking outside oil markets for its next major move.”
The US Federal Open Market Committee (FOMC) is set to start a two-day meeting on Tuesday.