Boats float in front of the Vopak oil storage terminal in Johor, Malaysia. Picture: REUTERS/HENNING GLOYSTEIN
Boats float in front of the Vopak oil storage terminal in Johor, Malaysia. Picture: REUTERS/HENNING GLOYSTEIN

Singapore — Oil prices dipped on Thursday, dragged down by weakening factory output in China and Japan, and record US crude output, although supply cuts led by producer cartel Opec support markets.

International Brent crude futures were at $66.15 a barrel at 2.48am GMT, down 24c, or 0.4% from their last close.

US West Texas Intermediate (WTI) crude oil futures were at $56.92 a barrel, down 2c from their last settlement.

Prices were dragged down by surging American crude oil production, which has risen by more than 2-million barrels a day over the past year, to an unprecedented 12.1-million barrels a day.

Traders said China’s weakening economy also weighed on oil prices.

Factory activity in China, the world’s biggest oil importer, shrank for the third consecutive month in February. China’s official manufacturing gauge fell to a three-year low, highlighting deepening cracks in an economy facing persistently weak demand at home and abroad.

In Japan, Asia’s second-biggest economy, factory output posted the biggest decline in a year in January as China’s slowdown affects the entire region.

Still, oil markets remain relatively well supported by supply cuts by Opec, which together with some non-affiliated producers like Russia, known as OPEC-plus, agreed late in 2018 to reduce output by 1.2-million barrels a day to prop up prices.

Because of these cuts, US commercial crude inventories fell 8.6-million barrels in the week to February 22 to 445.87-million barrels.

“Crude imports into the US fell 1.6-million barrels a day last week, to a two-decade low,” ANZ bank said on Thursday.

Reuters