SINGAPORE (Reuters) – Oil prices fell on Monday as sentiment was cautious following a slump in financial markets last week. This sparked concerns that global growth could slow down.
Oil and gas tanks are seen in an oil storage in a harbor in Zhuhai, China. October 22, 2018. REUTERS / Aly Song
Front-month Brent crude futures were trading at $ 77.56 a barrel at 430 GMT, 6 cents below their last close.
Graphic: Number of US Drilling Rigs – tmsnrt.rs/2OVjfgl
West Texas Intermediate (WTI) crude oil futures were $ 67.59 a barrel, unchanged from their last settlement.
Sentiment among investors remained cautious following heavy losses last week.
"The cooling economic conditions and the symptoms of weaker international trade have worsened bearish conditions as growth prospects weaken," said Benjamin Lu of brokerage Phillip Futures in Singapore.
Singapore-based ship tanker broker Eastport said stock prices fell on political uncertainty, rising interest rates and disappointing earnings at some companies.
Financial market turbulence could "put pressure on investment and consumer spending, reduce trade flows and ultimately meet demand," it said.
Hedge funds have reduced their US crude oil bulletins to their lowest level in more than a year last week, the US Commodity Futures Trading Commission said Friday.
The speculator group reduced its combined futures and options positions in New York and London by 42,644 contracts to 216,733 weekly on October 23, its lowest level since September 2017.
There were also signs of a slowdown in world trade, with prices for bulk and container ships – which contained most commodities and industrial goods – under pressure.
On the supply side, however, oil markets remain tense as US sanctions are coming up against Iranian crude oil exports, which are due to start next week, and especially in Asia, which is taking over most of Iran's supplies.
The tense market in Asia can be seen in the small amount of unsold crude stored in tankers in the waters around Singapore and South Malaysia, the region's main oil trading and storage center.
Only four stationary supertankers are currently filled with crude oil, as Refinitiv Eikon vessel tracking data shows.
That has dropped from about 15 a year ago and from 40 in mid-2016 during the peak of supply flooding.
However, there is no oil shortage in North America, as US crude oil production has risen by nearly a third since mid-2016 to around 11 million barrels a day.
Production should continue to rise. US drilling companies added two rigs during the week ending October 26, bringing the total to 875. This is the highest level since March 2015, energy consultancy firm Baker Hughes said on Friday.
More than half of all US rigs are located in the Perm basin in western Texas and eastern New Mexico, the country's largest shale oil formation.
Reporting by Henning Gloystein; Editing by Richard Pullin