Oil retreated from a two-week high amid increasing concerns over economic growth in China, the world’s second-biggest consumer of crude.
Futures in New York decreased 0.7%, recouping some of its earlier losses of as much as 2.6%. European stocks and US equity-index futures slumped as Apple cited an unforeseen slowdown in China and cut its sales outlook, just days after data showed weakening factory conditions across Asia.
Crude gained on Wednesday on signs that OPEC made an early start on its pledged output curbs.
Apple’s forecast cut is the latest sign that a long-running trade war between the US and China may be hurting the world’s two biggest economies.
Along with political turmoil in Washington and higher interest rates by global central banks, the spat has weighed on crude. While output from the Organisation of Petroleum Exporting Countries (OPEC) plunged by the most in almost two years last month, investors remain wary over the effectiveness of the group’s strategy as America pumps at a record pace.
"OPEC and other producers not only have to deal with a renewed pick-up in US production, but also the global outlook for growth and demand," said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
"The market worries when data from the world’s biggest importer, China, continues to show signs of slowing."
West Texas Intermediate for February delivery dropped as much as 2.6% to $45.35 a barrel on the New York Mercantile Exchange, and was at $46.19 at 10:58 in London. The contract settled $1.13 higher at $46.54 on Wednesday. Total volume traded was about 29% above the 100-day average.
Brent for March settlement was 8 cents lower at $54.83 a barrel on the London-based ICE Futures Europe exchange.
The global benchmark crude climbed 2.1% to $54.91 on Wednesday. It traded at a premium of $8.31 to March WTI.
On Wednesday, Chinese manufacturing numbers – signaling contraction for the first time since mid-2017 – torpedoed investor optimism on the first full day of trading in 2019.
That’s after global stocks had their worst December rout since 2008 on concern the US Federal Reserve’s tighter monetary policy will weigh on growth. Meanwhile, parts of the American government remained shut as congressional leaders failed to strike a deal with President Donald Trump.
In a sign of urgency felt by producers to stall the slide in crude prices, Saudi Arabia throttled back production a month before wider supply curbs pledged by OPEC and its allies start.
The kingdom’s cutbacks reduced the group’s overall output by 530 000 barrels a day in December, the sharpest pullback since January 2017.
Other oil-market news: Venezuela, once Latin America’s largest oil exporter, ended 2018 with a whimper as overseas sales dropped to the lowest in nearly three decades. American drivers are likely to pay a little less for gasoline this year and Trump is happy to take credit.
The projected $2.70 a gallon pump price for 2019 is 3 cents lower than 2018 levels, although this year’s high could reach $3 as soon as May and top $4 in some cities, according to GasBuddy’s Price Fuel Outlook.
Brent March $150 calls are the most held options contract for all of 2019 on the global crude benchmark, SocGen analysts write in a report.
Kazakhstan’s energy ministry has approved a tariff of $15 a ton to transport 10 million tons of Russian oil a year to China from 2019 through 2023.