Crude oil trading in the new year began with a slide, with Brent crude trading at US$53.12 a barrel at the time of writing, down 1.26 percent, and West Texas Intermediate at US$44.92 a barrel, down 1.08 percent.
Benchmarks remained pressured by rising U.S. production, which, according to the EIA averaged 11. 7 million barrels daily in the third week of December, and global economic growth worry, reinforced by the latest industrial activity data from China, which signaled a contraction.
According to a Reuters report, factory activity in China fell in December for the first time in more than two years in the latest indication that the trade war with Washington is taking its toll on one of the world's largest and fastest-growing economies.
What's worse for oil prices, however, is the fact that factory activity slowed down across all of Asia, not just in China. Asia is the biggest driver of crude oil demand, according to all forecasts, so any suggestion of faltering demand there would have a strong negative effect on prices.
It was on this economic growth worry that oil recorded its first annual loss since 2015, according to analysts. Brent crude shed a total 20 percent in 2018 while West Texas Intermediate lost almost 25 percent as shale boomers continue their relentless production growth despite pipeline bottlenecks in the Permian and shortages of frack crews that pushed up producers' costs.
The outlook for this year, unsurprisingly, remains highly uncertain. U.S. production will likely continue to grow while OPEC and Russia begin cutting their output to stabilize prices. A Reuters poll among analysts revealed that most expect Brent to trade below US$70 a barrel this year, pressured by U.S. production growth and slower economic growth expectations that would offset any positive effect on prices from the OPEC+ crude oil production cuts.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More