Oil prices fall 1% as economic worries outweigh tanker tensions

[NEW YORK] Oil prices fell more than 1 per cent on Monday after more poor Chinese economic figures fanned fears of lower worldwide oil demand.

Brent crude futures lost US$1.07 to settle at US$60.94 a barrel, a 1.73 per cent loss. US West Texas Intermediate (WTI) crude futures fell 58 cents to settle at US$51.93 a barrel, a 1.10 per cent loss.

Prices have fallen around 20 per cent since a 2019 high reached in April, in part due to concerns about the US-China trade war and disappointing economic data.

China's industrial output growth unexpectedly slowed to a more than 17-year low, data from the National Bureau of Statistics showed on Friday. It grew 5.0 per cent in May from a year earlier, missing analysts' expectations of 5.5 per cent and well below April's 5.4 per cent.

US President Donald Trump and China's President Xi Jinping could meet at the G-20 summit in Japan later this month. Mr Trump has said he would meet with Mr Xi at the summit, although China has not confirmed the meeting.

"All the major reporting agencies are reporting that demand is going to be weaker," said Phil Flynn, an analyst at Price Futures Group in Chicago. "That has played into the market malaise. Things we would normally rally off of, we're not."

Bank of America Merrill Lynch lowered its Brent price forecast to US$63 per barrel from US$68 a barrel for the second half of 2019 on faltering demand.

Worries remained about increased tensions in the Middle East following last week's attacks on two oil tankers in the Gulf of Oman. The United States blamed the attacks on Iran but Tehran denied involvement.

Saudi Arabian energy minister Khalid al-Falih said on Monday that countries need to cooperate on keeping shipping lanes open for oil and other energy supplies to ensure stable supplies.

Market participants also await a meeting between the Organization of the Petroleum Exporting Countries and other producers including Russia, a group known as Opec+, to decide whether to extend a production cut agreement that ends this month.

The group has been considering since last month moving the date of their policy meeting in Vienna to July 3-4 from June 25-26.

After a meeting on Monday, Iran's oil minister said he told his Russian counterpart that he still disagreed with the early July dates but could attend if the dates were shifted to July 10-12, the Iranian oil ministry's news agency Shana reported.

Opec+ agreed to cut output by 1.2 million barrels per day from Jan 1.

In the United States, US oil output from seven major shale formations is expected to rise by about 70,000 barrels per day (bpd) in July to a record 8.52 million bpd, the US Energy Information Administration said in a monthly drilling productivity report on Monday.

REUTERS