Crude Oil price drops to $60 over US, China trade dispute

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Crude oil price yesterday headed for its biggest one-day drop in a month as a result of evidence of yet more growth in US crude supply

This is coming as the federal government has unveiled plans to mobilise other oil and gas producers in Africa on the platform of African Petroleum Producers Organisation (APPO) to raise up to $2 billion to finance energy projects across the continent.

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Further weighing on oil markets is the trade dispute between the United States and China, which looks unlikely to end anytime soon and has increasingly impacted on the Chinese economy.

However, the price is still on course for its strongest January gain for 14 years.

The global benchmark, Brent crude oil was down $1.49 at $60.15 per barrel, down 2.5 per cent on the day in their largest one-day percentage fall since late December, while US futures fell $1.71 to $51.98 a barrel.

United States crude production, which hit a record 11.9 million barrels per day late last year, has undermined sentiment in the oil market, Reuters quoted oil traders as saying.

US energy companies last week increased the number of rigs looking for new oil for the first time since late December to 862, energy services firm Baker Hughes said on Friday.

Even with an uncertain outlook for demand and evidence of growing supply, the oil market has benefited this month from another round of production cuts by the Organisation of Petroleum Exporting Countries (OPEC) and its partners, as well as robust trade in physical barrels of crude led by China.

The price has risen by 12 percent so far in January, the largest increase in percentage terms in the first month of the year since 2005, when it gained 14 per cent.

Investors have added to their bets on a sustained rise in the oil price this month for the first time since September, according to data from the InterContinental Exchange.

But much of the demand outlook hinges on China and whether its refiners will continue to import crude at 2018’s breakneck pace.

Industrial companies in China reported a second monthly fall in earnings in December, despite the government’s efforts to support borrowing and investment.

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