SINGAPORE: Oil prices fell in Asian trade on Monday on growing concerns about demand as equities tumble on global growth woes and supply increases.
US benchmark West Texas Intermediate for November delivery fell $1.23 to $84.59—its weakest for two years—while Brent North Sea crude lost $1.24 to a four-year low of $88.97.
“Prospects for global oil demand growth have weakened recently,” British bank Barclays said in a market analysis.
It said global oil consumption this year grew at its slowest pace since 2009, with weakness in Chinese demand a key factor. China’s oil consumption this year rose at its slowest rate since 1990, it added.
China, the world’s second biggest economy, on Monday said its trade surplus more than doubled to $31.0 billion in September as exports jumped and imports increased at a slower rate.
“The oversupply [in oil]has built since July,” Barclays said, pointing to the return of Libyan crude into the market after a prolonged shutdown in facilities due to civil unrest.
“As Libyan output recovers, more West African crude oil barrels get displaced from North America and North Sea crude oil gets fewer bids from European refineries that have reduced runs,” it said.
Suppliers are now looking to Asia to absorb the surplus oil, including forging long-term supply deals at cheaper prices to gain market share, it added.
Saudi Arabia and the United Arab Emirates recently cut their selling prices to Asian refineries, with Iran following suit, it noted.
“Based on official selling prices released this week, Iran is set to sell its crude to Asia in November at the biggest discount in almost six years,” Barclays said.
Malaysian bank CIMB said Saudi Arabia, the world’s largest oil exporter, slashed the price of Arab Light crude for Asia to its lowest level since December 2008.