Oil prices remain weak on Asia economy woes; shares in commodity firms tumble

Image: A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices remained low in early Asian trading on Tuesday following a slide of almost 3 percent the previous session, dragged down as concerns over Asia’s economic health mounted and as production remained high.

Brent crude futures were at $47.31 per barrel at 0138 GMT, down 3 cents from their last close and following a more than 2.5-percent drop on Monday. U.S. West Texas Intermediate (WTI) futures were at $44.44 a barrel, virtually unchanged from their last settlement.

Oil prices, along with most other commodities, have fallen sharply recently, with crude futures losing almost 60 percent of their value since June 2014.

Japanese stock markets, among the earliest to open in Asia, slid to eight-month lows on Tuesday as global stocks came under pressure from worries about economies in China and other emerging markets.

“China’s industrial profits declined 8.8 percent in August from a year earlier, with the biggest drops concentrated in producers of coal, oil and metals,” ANZ said on Tuesday.

“These declining margins are likely to add to the global deflationary story, where declining domestic demand is forcing companies to export deflation to the rest of the world.”

On the supply side, Russia’s 2015 oil production is expected to increase slightly from last year to 526 million tonnes, or 10.56 million barrels per day (bpd), deputy minister for natural resources and ecology Denis Khramov said on Tuesday.

That would be up 1 million tonnes from last year but lower than a forecast of 530.5 million tonnes by Russia’s Economy Ministry, and another sign that neither Russia nor the main Middle East producers from the Organization of the Petroleum Exporting Countries (OPEC) are so far willing to curb production in support of prices.

The slumping oil and commodities markets are hitting shares of trading merchants hard.
Stocks in mining and trading company Glencore fell almost 30 percent and closed at a record low on Monday over concerns it is not doing enough to cut its debt to withstand a prolonged fall in commodity markets.

Shares of Asian commodity merchant Noble Group dropped as much as 15 percent on Tuesday, to their lowest level since the global financial crisis in 2008.

Offsetting some of the bearish sentiment was data from market intelligence firm Genscape estimating a drawdown of over 1 million barrels last week from the Cushing, Oklahoma delivery hub for U.S. crude, traders who saw the figures said.

(Editing by Joseph Radford)

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