Oil Futures Slip on Weak Growth Outlook

WASHINGTON (DTN) -- Crude and product futures on the New York Mercantile Exchange and Intercontinental Exchange settled marginally lower on Monday, pressured by concerns over subdued global economic growth and slowing industrial output from major economies. In addition, Russia once again missed its quota under the production accord with the Organization of the Petroleum Exporting Countries last month, stoking fears of rising supplies from the second-largest oil producer.

NYMEX November West Texas Intermediate futures gave up $0.47 to settle at $53.31 barrel (bbl) ahead of expiration Tuesday afternoon. The next month delivery December contract expanded its premium to $0.20. ICE December Brent crude futures settled down $0.46 bbl at $58.96 bbl. NYMEX November ULSD futures were down 0.65 cents to $1.9406 gallon and NYMEX November RBOB futures retreated $1.58 to end the session at $1.6072 gallon.

Crude oil and refined product contracts were showing little movement Monday afternoon after posting modest losses at the start of the session. Markets continue to focus on signs of slowing economic growth and global trade tensions from Europe to Asia. China announced Monday it seeks $2.4 billion in retaliatory sanctions against the United States for noncompliance with a World Trade Organization ruling in a tariffs case dating back to 2010. Meanwhile, the U.S. commerce secretary suggested the partial trade deal does not need to be finalized in writing next month and instead both sides should focus on mutually acceptable terms. U.S.-Sino tensions remain at the core of the market's bearish sentiment and until a clear and convincing solution to the current impasse is found, the upside for the oil complex will likely be limited.

Across the Atlantic, British lawmakers voted Saturday to withhold support for Prime Minister Boris Johnson's new Brexit deal, once again failing to find a solution to the British political crisis. Monday the vote was denied by the House Speaker amid intensifying protests on the streets of London in a sign of a bitterly divided country. Any UK-EU agreement that avoids a no-deal Brexit should boost economic growth and oil demand.

On the supply side, Russia announced Sunday it missed the quota under an OPEC+ agreement last month due to an increase in natural gas condensate production as the country prepared for winter months. According to an official statement, Russia's output reached 11.25 million barrel per day (bpd) in September, down from August's 11.29 million bpd, but still above the quota agreed under OPEC+ accord. Russia committed to cut its output by 228,000 bpd from its October 2018 level, which averaged 11.41 million bpd.

Adding to oversupply concerns, Kuwait and Saudi Arabia have reportedly began talks on resuming oil production from jointly operated fields in the 500,000 bpd Neutral Zone. The two countries halted output from the Khafji and Wafra oilfields more than three years ago, cutting nearly 0.5% of global oil supply.

Liubov Georges can be reached at liubov.georges@dtn.com

(BAS)