Oil futures declined sharply Thursday, tracking lower moves in most global equity benchmarks, as fear of a China-led demand slowdown gripped investors.

West Texas Intermediate crude for February delivery

CLG9, -1.87%

 fell $1.16, or 2.2%, to $51.15 a barrel on the New York Mercantile Exchange, a day after posting a modest gain in the previous session.

March Brent crude

LCOH9, -1.55%

gave up $1.15, or 1.9%, to $60.18 a barrel on ICE Futures Europe. U.S. oil has enjoyed two consecutive days of gains and more broadly, futures have only settled lower on two days since Dec. 28, according to FactSet data.

Market participants attributed Thursday’s slide to uncertainty over whether the U.S. and China will resolve a protracted trade spat that has weighed on investment sentiment and raised questions about the health of China, one of the world’s biggest importers of crude.

“Fears of oversupply, coupled with fears slowing demand from China are likely to hang over the energy market,” wrote David Madden, market analyst at CMC Markets UK, in a Thursday research note.

U.S. stock indexes, including the Dow Jones Industrial Average

DJIA, +0.59%

and the S&P 500 index

SPX, +0.22%

were set to open lower, on the brink of ending their own two-day rise. Stocks and oil have closely tracked each other in recent weeks.

Thursday’s oil moves also come after a monthly report showed that oil production by OPEC fell in December as members appeared to get a jump on their pledge and that of close non-cartel producers to cut daily output beginning in January as global oil prices plunged.

OPEC member output fell by 751,000 barrels a day to 31.6 million barrels a day in December, the Organization of the Petroleum Exporting Countries said in its monthly report out Thursday.

Saudi Arabia, the de facto OPEC leader, slashed its production by more than expected, by 468,000 bpd to just over 10.5 million bpd, according to independent country data, reported by CNBC.

On Wednesday, the Energy Information Administration reported a bigger-than-expected fall in crude inventories of 2.7 million barrels for the week ended Jan. 11. Analysts polled by S&P Global Platts expected the EIA to report a smaller fall of 250,000 barrels in crude supplies, while the American Petroleum Institute on Tuesday reported a decline of 560,000 barrels.

Elsewhere on Nymex, February gasoline

RBG9, -1.77%

 fell 2% to $1.388 a gallon, while February heating oil

HOG9, -1.59%

 declined 1.6% to $1.865 a gallon. February natural gas

NGG19, +4.61%

meanwhile, surged by 5.2% to $3.556 per million British thermal units.

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