Oil prices dipped on Wednesday on increasing signs of a global economic slowdown, although OPEC-led supply cuts helped support Brent crude above $60 per barrel.
International Brent crude oil futures were at $60.46 per barrel down 18 cents, or 0.3 per cent from their last close, while the US West Texas Intermediate (WTI) crude futures were down 23 cents, or 0.4 per cent, at $51.88 a barrel.
Prices were weighed down as signs of a global economic slowdown mounted.
In Japan, core machinery orders slowed sharply in November in a sign corporate capital expenditure could lose momentum as a bruising US-China trade war spills into the global economy.
Adding to the trade woes, the US economy is taking a larger-than-expected hit from a partial government shutdown, White House estimates showed on Tuesday, as contractors and even the Coast Guard go without pay and talks to end the impasse seem stalled.
The outlook for the global economy was darkened further when British lawmakers on Tuesday overwhelmingly rejected Prime Minister Theresa May’s deal to leave the European Union.
Oil prices are receiving support from supply cuts started late last year by the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producer Russia.
However, surging US crude oil production which hit a record 11.7 million barrels per day late last year, threatens to undermine the OPEC-led efforts.
US crude oil is expected to rise to a new record of more than 12 million barrels per day (bpd) this year and to climb to nearly 13 million bpd next year, the US Energy Information Administration said on Tuesday in its first 2020 forecast.
With so much uncertainty around demand and supply, the outlook for oil markets is unclear.
Oil prices are expected to oscillate close to current levels, according to a large annual survey of energy professionals conducted by Reuters between January 8 and 11, with Brent prices in 2019 expected to average $65 per barrel, unchanged from surveys in 2016, 2017 and 2018.
“Fundamentals offer no clear price direction,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
“The oil market remains amply supplied and prices are set to trade rangebound,” he said. “Softening demand makes too high prices short-lived … Similarly, (supply) cuts and slowing shale output make too low prices short-lived.”