Oil markets slid by around one per cent in 2019's first trading on Wednesday, pulled down by surging output in the US and Russia and concerns about an economic slowdown, especially in Asia's main growth region of China.
Brent crude futures were at $53.22 per barrel at 0745 GMT, down 58 cents, or 1.1 per cent, from their final close of 2018.
West Texas Intermediate (WTI) futures were at $44.89 per barrel, down 52 cents, or 1.2 per cent.
Factory activity weakened in December across Asia as the Sino-US trade war and a slowdown in Chinese demand hit production in most economies, pointing to a rocky start for the world's top economic growth region in 2019.
China on Wednesday cut its first batch of crude import quotas for 2019 versus those a year ago. The Ministry of Commerce granted quotas totalling 89.84 million tonnes in its first allowances for 2019, down from 121.32 million tonnes issued in the first batch of 2018.
Independent market analyst Greg McKenna said in a note on Wednesday that it was “difficult for traders and investors to ignore what looks like a genuine global economic slowdown.”
That is also impacting sentiment in oil markets. Oil prices ended 2018 lower for the first time since 2015, after a desultory fourth quarter that saw buyers flee the market over growing worries about too much supply and mixed signals related to renewed US sanctions on Iran.
“Oil prices ... registered their first yearly decline in three years on fears of a slowing global economy and concerns of an ongoing supply glut,” said Adeel Minhas, a consultant at Australia's Rivkin Securities.
For the year, WTI futures slumped nearly 25 per cent, while Brent tumbled nearly 20 per cent.
'DON'T UNDERESTIMATE SHALE'
The outlook for 2019 is riddled with uncertainty, analysts said, including the US-China trade concerns and Brexit, as well as political instability and conflict in West Asia.
A Reuters poll showed oil prices are expected to trade below $70 per barrel in 2019 as surplus production, much of it from the US, and slowing economic growth undermine efforts led by the Organisation of the Petroleum Exporting Countries (OPEC) to cut supply and prop up prices.
On the production side, all eyes will be on the ongoing surge in US output and on OPEC's and Russia's supply discipline.
“Don't underestimate shale producers and the wider US oil industry in general. Too often this year the market pushed stories ... of bottlenecks yet US oil production will have grown by a massive 2+ million barrels per day between 1.1.2018 and 1.1.2019,” consultancy JBC Energy said in an analysis of 2018.
US crude output rose to an all-time high of 11.537 million bpd in October, the Energy Information Administration (EIA) said on Monday.
That makes the US the world's biggest oil producer ahead of Russia, which said on Wednesday it's own oil production in December hit a record 11.45 million bpd in December, up from a previous record of 11.37 million bpd in November.
In Nigeria, crude oil production stood at 2.09 million in 2018 compared with 1.86 million bpd the year before, the state oil firm said in a statement emailed on Wednesday.