Oil plasters on rising US rig numbers, decline in industry in China

SINGAPORE (Reuters) – Oil prices fell on Monday after US energy companies added rigs for the first time this year, suggesting that crude production could increase further, and as China, the world's second largest oil user, reported further signs of a economic downturn.

US. Crude oil futures were $ 53.33 per barrel at 0253 GMT, down 26 cents, or 0.5 percent, from their final settlement.

International Brent Crude futures were $ 61.50 per barrel, down 14 cents, or 0.2 percent.

High US crude oil production, which increased to a record 11.9 million barrels a day (bpd) last year, has weighed on oil markets, traders said.

In a sign that production could rise further, US energy companies last week increased the number of rigs looking for new oil for the first time in 2019 to 862, another 10 rigs, said Baker Hughes Energy Services firm in its weekly report on Friday.

Beyond the oil supply, a key issue for this year will be demand growth.

Oil consumption has steadily increased, probably on average over 100 million bpd for the first time ever in 2019, largely driven by a boom in China.

However, an economic downturn among a trade conflict between Washington and Beijing weighs on expectations of fuel demand growth.

Revenue in China's industrial consultants declined in December for another straight month in December on falling prices and weak factory activity, which pushed more on the world's second largest economy, reporting the slowest growth rate last year since 1990.

China is trying to Limit the decline with aggressive fiscal measures.

But there are concerns that these measures may not have the desired effect, as China's economy is already burdened with massive debt, and some of the major government measures may be of little use.

The increased US supply, the country is now the world's largest producer, and the economic downturn weighs on the oil price outlook.

"We expect US crude oil prices to range between $ 50- $ 60 a barrel in 2019 and about $ 10 a barrel for Brent," says Tortoise Capital Advisors in the 2019 oil market.

But Tortoise added that oil prices would be supported over $ 50 a barrel, as it was "very clear that Saudi Arabia would no longer be willing to accept these lower oil prices".

The organization of the petroleum exporting countries (OPEC), de facto led by Saudi Arabia, began delivering cuts last year to tighten markets and bend prices.