Brent crude oil prices fell below $50 a barrel on Monday after the global economic outlook darkened and Iraq announced record oil production.
The world’s biggest energy consumer, China, faces significant downward pressure on its economy, its premier Li Keqiang was quoted by state radio as saying on Monday.
China is expected this week to report growth slowing to 7.2 percent from a year ago, the weakest since the depths of the last global economic crisis. Data from China’s National Bureau of Statistics showed on Sunday house prices fell for a fourth straight month.
Brent crude traded around $49.81 a barrel by 1218 GMT, down 36 cents. U.S. crude was trading down 51 cents at $48.18 a barrel.
Oil prices have dropped by more than half since last June as output around the world soared while demand growth slowed. Although the International Energy Agency (IEA) said last week a reversal in the trend was possible this year, it added that prices may fall further before rising.
“There’s still more supply than demand and that’s a situation that will not change in just a few weeks,” said Hans van Cleef, energy economist at ABN Amro.
Iraqi Oil Minister Adel Abdel Mehdi said on Sunday Iraq pumped 4 million barrels per day (bpd) of oil in December, its highest ever thanks to higher output from its southern terminals and a surge in supply from the north.
Analysts said prices found some support from a drop in U.S. drilling rigs, signifying a likely fall in production in the future. But they said there was not much room for gains.
“Some positive data points helped to stabilize oil for now ... Upbeat IEA comments and a falling U.S. rig count were the latest positive news. While the news was able to halt oil’s price decline, it [is] not enough to turn prices bullish,” Morgan Stanley said in a note to clients on Monday.
A meeting of the European Central Bank on Thursday will likely see the launch of a government bond-buying campaign, pointing to further euro falls against the dollar as well as to downward pressure on oil prices.
“It is not hard to find evidence of increasing concerns around global economic weakness. Yield curves across the world have been flattening [longer term yields falling relative to short ones], a dynamic typically associated with expectations of weakening economic conditions,” Timera Energy said on Monday.