An oil tanker in the sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: VENEZUELA-PDVSA/MILITARY REUTERS/ALEXANDRA ULMER/FILE PHOTO
An oil tanker in the sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: VENEZUELA-PDVSA/MILITARY REUTERS/ALEXANDRA ULMER/FILE PHOTO

Singapore — Oil prices fell on Monday after climbing to their highest in 2019 earlier in the session as China reported car sales in January fell for a seventh month, raising concern about fuel demand in the world’s second-largest oil user.

International Brent crude futures were at $66.20 a barrel at 3.53am GMT, down 5c from their last close. Brent earlier climbed to $66.78 a barrel, the highest since November 2018.

US West Texas Intermediate (WTI) crude oil futures were at $55.82 a barrel, up 23c from their last close. WTI prices also rose their highest since November, at $56.13 a barrel, earlier on Monday.

Traders said Brent prices slipped after China reported the weak car sales data.

China’s vehicle sales last month fell by 15.8% versus the same month in 2018, an industry association said on Monday. This continued the 2018 trend, in which China recorded the first annual drop in vehicle sales on record.

So-called new energy vehicle sales in January, which include electric vehicles, registered a 140% increase, underscoring the expectation that oil demand from cars may peak in China in the coming years.

Despite this data, global oil markets remain relatively tight because of supply cuts organised by the producer cartel Opec and some non-affiliated producers like Russia. The group of producer countries agreed late last year to cut output by 1.2-million barrels a day to prevent a large supply overhang from swelling.

Further supporting crude prices have been US sanctions against oil exporters and Opec-members Iran and Venezuela.

Traders said financial markets, including crude futures, were also generally supported by hopes that the US and China would soon resolve their trade disputes, which have dragged on global economic growth.

“Positive signs in the US-China trade talks helped boost sentiment across markets,” ANZ bank said on Monday.

At least partly offsetting the supply cuts has been a surge in US crude oil production by more than 2-million barrels a day in 2018, to a record 11.9-million barrels a day.

And there are signs that US output will rise further.

US energy firms last week increased the number of oil rigs looking for new supply by three, to a total of 857, energy services firm Baker Hughes said in a weekly report last Friday.

That means the US rig count is higher than a year ago when fewer than 800 rigs were active.

Reuters