China revealed factory activity fell for the first time in over two years in December, revealing the ongoing challenges Beijing faces in its scuffle with the U.S. over trade.
“The manufacturing survey data out of China this week is particularly negative for crude oil, as it goes to the heart of the key demand center for the market,” John Kilduff, a partner at Again Capital Management, told Reuters.
On the supply side, Russian production hit a post-Soviet record in 2018. Additionally, U.S. shale also pushed crude oil output to a record in October, and Iran raised exports in December as well.
While the Organization of Petroleum Exporting Countries and its allies, including Russia, have made plans to cut supply by 1.2 million barrels per day. U.S. oil production, which now outpaces all other major oil producing countries, has more or less negated the cartel’s plans. Nevertheless, energy minister for the United Arab Emirates remained optimistic that the market will stabilize in the first quarter.
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