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Weak economic outlook and oversupply weigh on oil markets

Published 08/09/2015, 10:44 am
Updated 08/09/2015, 10:47 am
© Reuters.  Weak economic outlook and oversupply weigh on oil markets
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SINGAPORE, Sept 8 (Reuters) - U.S. oil prices fell on Tuesday as the global economic outlook darkened further and cooperation between oil producing countries to curb oversupply looked unlikely, pulling U.S. crude prices down around three percent in early Asian trading.

Japan's economy shrank an annualised 1.2 percent in April-June, revised gross domestic product (GDP) data showed on Tuesday, despite ongoing government and central bank measures to support growth.

Asian shares looked set to struggle on Tuesday to defend the three-year trough hit last month as investors sought more signs of stability in China's slowing economy and volatile financial markets. ID:nL4N11D3JV

"Oil prices are now expected to stay around current levels until the end of 2015, before rising to the mid to high 50s by the end of 2016," National Australia Bank said in its September commodities note to clients.

U.S. crude benchmarks CLc1 were down over 3 percent from their previous close at 0025 GMT at $44.66 per barrel, and although Brent futures LCOc1 firmed 40 cents in early trading to $48.03 a barrel, the global benchmark was still down $1.24 from its opening value on Monday.

Oil prices have fallen almost 60 percent since June 2014 on a global supply glut, with prices seesawing in recent weeks as concerns about a slowing Chinese economy caused turmoil in global stock markets.

On the supply side, recent speculation that Russia might be willing to cooperate with the Organization of the Petroleum Exporting Countries (OPEC) to curb output in support of prices were given a blow on Monday after the chief executive of Russian oil major Rosneft ruled out a Russian cut. ID:nL4N11D0R1

OPEC is producing close to record volumes to squeeze out competition, especially from U.S. shale producers, which have so far weathered the price plunges to keep pumping oil.

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