Oil held losses below $50 a barrel as China’s economic growth failed to spur confidence demand will be enough to eliminate a global supply glut.
Futures were little changed in London after falling 2.7% on January 19, the most in a week. China’s gross domestic product expanded by 7.4% in 2014, the slowest rate since 1990, official data show.
In the US, where oil production has surged amid a shale boom, the government will let the market “decide what happens” with supply and demand, according to Amos Hochstein, the State Department’s energy envoy.
Oil slid almost 50% last year as the US pumped at the fastest pace in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to cut output.
While Iran is consulting with other OPEC members to respond to the price drop, the group has made no decision to reduce its output target, Oil Minister Bijan Namdar Zanganeh said.
“China’s consumption continues to increase so they have to import more, but this could be more of a short-term boost and investors want to see more consistency,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said. “Right now, the market is still skeptical.”
Brent for March settlement was at $48.79 a barrel on the London-based ICE Futures Europe exchange, down 5 cents, at 2:18 p.m. Singapore time.
The contract declined $1.33 to $48.84 on Jan. 19. Total volume was about 37% below the 100-day average.
The European benchmark crude traded at a premium of 88 cents to West Texas Intermediate, the US marker grade.
WTI for February delivery, which expires today, decreased $1.18 to $47.51 a barrel in electronic trading on the New York Mercantile Exchange, compared with the close of January 16.
Floor trading was suspended Monday for the Martin Luther King Jr. holiday and transactions will be booked with Tuesday’s for settlement purposes. The more active March future was down $1.26 at $47.87.
GDP (CNGDPYOY) in China, the world’s second-biggest oil consumer, rose by 7.3% in the three months ended December compared with a year earlier, the National Bureau of Statistics reported in Beijing.
That surpassed a median estimate of 7.2% in a Bloomberg News survey of 50 economists.
The Asian nation will account for about 11% of global oil demand this year, compared with 21 percent for the US, projections from the Paris-based International Energy Agency show.
Oil markets “can adjust themselves” without intervention, according to Hochstein, the special envoy and coordinator of international affairs at the State Department’s Bureau of Energy Resources.
“We do have mechanisms to work with our partners around the world if something extreme happens, but that’s not where I think we are,” he said in an interview in Abu Dhabi on January 19. “This is about a global market that is addressing the supply-demand curve.”
US production climbed to 9.19 million barrels a day through January 9, the most in weekly records dating back to January 1983, according to the Energy Information Administration.
The country’s oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked shale formations from Texas to North Dakota.
“If the oil price wants to recover back to where it was, we need to see a reduction of about 1 million to 1.5 million barrels a day,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “It will need to be a shared cut. The US is not going to cut production and that’s the problem.”
OPEC, which supplies about 40% of the world’s crude, maintained its output quota of 30 million barrels a day at a meeting on November 27.
The 12-member group pumped 30.2 million a day in December, exceeding its target for a seventh straight month, data compiled.
Iran, OPEC’s fourth-largest producer, sees “no threat” even if oil slumps to $25 a barrel and isn’t seeking emergency discussions, Zanganeh told reporters on January 19 at a conference in Tehran, according to the state-run Fars news agency. The group is scheduled to meet June 5 in Vienna.
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