Oil prices dip on gloomy Chinese, European outlook

[SINGAPORE] Oil prices fell in early Asian trade on Monday, with markets expecting gloomy Chinese economic data to be published this week.

Chinese new home prices fell an average 4.3 per cent year-on-year in 68 of the 70 major cities monitored. That was an appetiser for Tuesday's report on gross domestic product which is expected to show annual growth slowed to 7.2 per cent last quarter, undershooting Beijing's 7.5-per cent target and the weakest in 24 years.

In Europe, the main event of the week will be Thursday's meeting of the European Central Bank (ECB), which is considered almost certain to 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. "Commodity markets to be driven by currency markets and expectations of ECB quantitative easing this week," ANZ bank said in a note on Monday.

Benchmark Brent crude futures were trading at US$49.83 per barrel at 0125 GMT, down 34 cents since their last settlement. US crude was trading down 41 cents at US$48.28 a barrel.

Oil prices have dropped by more than half since last June as production around the world has soared while demand slows. Although the International Energy Agency (IEA) said that a reversal in trend was possible this year, it added that prices may fall further before the market begins to rise again.

US markets will be shut on Monday for a public holiday.

REUTERS