Declining Oil Prices Offered No Support Anywhere

Crude oil opened in the green but reversed within minutes to trade at 46.88 down 24 cents in the morning session. Brent oil diverged adding 15 cents to 51.97 with both currencies trading below their recent ranges and near longer term bottoms. Asian stocks fell for the first time in four days amid signs of a deepening slowdown in China’s economy. Crude declined with copper, while the won strengthened.

Oil retreated 0.6 percent, with Iran claiming it will be able to bolster crude production a week after sanctions are lifted. Copper dropped 0.4 percent. South Korea’s currency climbed 0.5 percent as the central bank reported a record current-account surplus.

Prices fell in Asia on continuing concerns about the global supply glut after the OPEC cartel’s indication that it will not budge from its current lofty output levels, analysts said. Prices were facing downward pressure following “signs that top producers in the Middle East were continuing to pump at record levels despite a growing global glut,” said Singapore’s United Overseas Bank in a market commentary.

WTI valued tumbled late in the session as the month closed after Abdullah El-Badri, secretary-general of the Organization of the Petroleum Exporting Countries, said the group would not cut output in response to lower prices.

An official PMI of Chinese manufacturing released over the weekend slid to a five-month low, with the final reading on a private gauge Monday contracting more than estimated. Factory indexes for Japan to India and the U.S. will be released and Greek markets are set to resume following a five-week suspension.

Recently heads of some of the world’s biggest energy companies have been saying oil prices will remain depressed for some time – perhaps for the next five years – and now they’ve decided to cut their costs in the most painful way possible: massive job cuts. And as oil producers struggle to rein in spending elsewhere in their operations, the pain is being shared by the oil service companies they rely on.

In June 2014, its average global price was more than $110 per barrel. Now it’s around $50 per barrel, despite a brief, small spike recently that brought it up to around $60 per barrel.

The price fall began because drillers in the United States had increased oil production, mostly from shale deposits, which are more expensive to exploit. Instead of reducing its own production to help boost prices, OPEC, under Saudi leadership, decided at its semiannual meeting in November to keep production at 30 million barrels a day in an effort to make shale drilling unprofitable. To make matters worse, OPEC members are exceeding that cap by about 1 million barrels a day.

Crude futures are under pressure also owing to the strength of the greenback, which makes dollar-priced oil more expensive to holders of weaker units, dampening demand. The dollar has picked up steam on expectations the Federal Reserve will raise US interest rates later this year.