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

Tokyo — Oil prices fell on Monday after data showing China’s overall exports of goods and services shrank for a fourth consecutive month, sending shivers through a market already concerned about damage being down to global demand by the Sino-US trade war.

Brent futures were down 21c, or 0.3%, at $64.18 per barrel by 4.20 SA time, after gaining about 3% last week on the news that Opec and its allies would deepen output cuts.

West Texas Intermediate oil futures were down 28c, or 0.47% to $58.92 a barrel, having risen about 7% last week on the prospects for lower production from Opec+, which includes associated producers such as Russia.

Monday’s sudden chill came after customs data released on Sunday showed exports from the world’s second-biggest economy fell 1.1% in November from a year earlier — a sharp reversal from expectations for a 1% rise in a Reuters poll.

The weak start to the week came despite data showing China’s crude imports jumped to a record, revealing just how deep jitters are embedded in the market over the US-China trade row that has stymied global growth and oil demand.

The sagging export data is “a casualty again of the protracted trade war”, said Stephen Innes chief Asia market strategist at AxiTrader.

Easing stance

Washington and Beijing have been trying to agree a trade deal that will end tit-for-tat tariffs, but talks have dragged on for months as they wrangle over key details.

Monday’s declines also went against signs on Friday that China was easing its stance on resolving its trade dispute with the US, confirming on Friday that it was waiving import tariffs for some soybean and pork shipments.

The price drops also put an end to a strong run in previous sessions fuelled by hopes for the Opec+ production curb deal.

On Friday, those producers agreed to deepen their output cuts from 1.2-million barrels per day (bpd) to 1.7-million bpd, representing about 1.7% of global production.

“What made the announcement constructive… was the fact that Saudi Arabia said it will produce about 400,000 bpd below its new quota level,” ING Economics said in a note.

Production surged

“This would effectively take Opec+ cuts to 2.1-million bpd,” ING said.

Still, US production has surged since the Opec+ cuts were first introduced in 2017 in an attempt to drain a supply glut that had long weighed on prices. US output has risen even as the drill count has fallen, reflecting more efficient well extraction.

Energy services firm Baker Hughes said in its closely watched weekly drilling report on Friday that the US drill count fell in the week to December 6 — a seventh week of decline.

Drilling companies cut five oil rigs, leaving a total of 661, the lowest since April 2017.