LONDON (Reuters) – Oil prices fell on Monday as worries over the global economy kept the price of crude oil on course since its biggest monthly decline since mid-2016.
Oil and gas tanks are seen in an oil storage in a harbor in Zhuhai, China. October 22, 2018. REUTERS / Aly Song
Brent Crude Oil LCOc1 fell 58 cents to $ 14.04 per barrel at 1423 GMT. US crude oil CLc1 fell 63 cents to $ 66.96 a barrel.
Even with US sanctions on Iranian exports taking effect in less than a week, oil prices have lost almost 7 percent this month, the largest percentage decline since July 2016.
Industrial commodities, such as crude oil and copper, were shaken by sharp losses in global equities amid concerns about corporate earnings and fears about the impact of escalating trade tensions on economic growth and a stronger dollar.
"It's often said that commodities get cold as stock markets sneeze, and this adage was shown in detail last week when a global decline in stock indicators dragged the energy complex down," said Stephen Brennock, strategist at PVM Oil Associates.
"Adding a tailwind to prevailing selling pressure is fueling concerns over burgeoning oversupply, with Saudi Arabia and Russia leading efforts to keep oil markets well supplied while doubling demand … The Iranian factor has been put on hold and the oil market will continue to shed bullish blood. "
Fund managers have lowered their bullish positions in crude oil futures and options to their lowest level since July 2017 for four consecutive weeks, as demand expectations become more uncertain.
Data from the InterContinental Exchange and the US Commodity Futures Trading Commission show that bullion positions in Brent and US crude oil futures and options fell by one-third to around 572 million barrels in four weeks.
This position equaled nearly 1.2 billion barrels in January.
"I wonder if the (price) declines are due to the underperformance that we saw in Chinese stocks overnight, based on data showing that profits in industrial companies declined by a fifth month," Craig said Erlam, senior market analyst at OANDA.
"The impact of tariffs is starting to show in the data, which could lower the country's growth prospects and weigh on demand expectations."
On the supply side, Iran has for the first time started selling crude oil to private companies through a domestic stock exchange, reported the news website of the Oil Ministry.
Additional reporting by Henning Gloystein in SINGAPORE; Cut by David Evans and Mark Potter