Global Oil Prices Down on Bearish OPEC Data

LONDON—Oil prices softened Monday with global crude benchmark Brent and its U.S. counterpart West Texas Intermediate down on the back of bearish production data from the Organization of the Petroleum Exporting Countries.

Brent was down 1.25% at $46.78 for July cargoes while WTI dipped 0.89% on the New York Mercantile Exchange at $45.49 a barrel for June deliveries, paring back strong April month-on-month gains.

The OPEC data obtained by news agency Reuters suggest that April production from the producer group was up 170,000 barrels a day month-on-month at 32.64 million b/d.

Germany's Commerzbank said in a note that OPEC's April output could have been much higher without outages in Kuwait, the United Arab Emirates, Venezuela and Nigeria that meant the figure fell just short of January's record of 32.65 million b/d.

After the recent bull run of oil, which hit five-and-a-half-month highs Friday, the OPEC production figures reinforce the concerns many observers have in terms of the bearish oversupply fundamentals still gripping the market. This may have negative impact on prices this week.

One positive for prices this week could be the continuing crisis now engulfing the U.S. shale oil sector with negative news always likely to provide a tailwind for prices.

The London-based Energy Aspects said that many players were experiencing cash-flow issues with even global oil-field services giants Schlumberger and Halliburton recording operational losses.

"Financial pressure is the current driver of production and it is the service companies whose revenues have been squeezed to unsustainable levels," the think-tank said in a note.

Oil-field services company Baker Hughes reported a decline of 11 drilling rigs in the U.S. to 332.

This is the lowest level in six-and-a-half years and down 50% from 12 months ago according to the Copenhagen-based Global Risk Management.

Meanwhile, the U.K. bank Barclays said Chinese oil demand grew by 180,000 b/d in the first quarter. Chinese oil consumption is a key indicator of global demand growth and the bank stated in a note that the figure was lower than in recent years.

"A key area to watch is the Chinese car industry," Barclays said. "We believe car sales should remain solid in 2016."

Chinese Manufacturing PMI was slightly below expectations when published Monday which could give a slight headwind for prices.

Write to Kevin Baxter at [e-mail]

(END) Dow Jones Newswires

May 02, 2016 08:05 ET (12:05 GMT)

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