SINGAPORE - Oil prices dropped in early trading in Asia on Monday despite a fourth weekly fall in US drilling activity, with analysts pointing to the weak economic outlook as the main reason for low crude prices.
The International Monetary Fund is likely to revise downwards its estimates for global economic growth due to slower growth in emerging economies, IMF head Christine Lagarde said in a newspaper interview.
In line with bearish sentiment, Brent crude futures were at US$48.27 (S$68.82) per barrel at 0024 GMT, down 33 cents from their last close. US West Texas Intermediate (WTI) futures were at US$45.34 a barrel, down 36 cents.
Crude futures are now down over 10 per cent since the beginning of the month, and rating agency S&P cut its Brent and WTI forecasts late last week by US$5 to US$50 per barrel and US$45 per barrel respectively for this year and said it saw 2016 prices at US$55 for Brent and US$50 for WTI.
The price fall came despite an ongoing fall in drilling activity in the United States.
US energy firms cut oil rigs for a fourth week in a row last week, a sign the continued weak prices were causing energy firms to reduce drilling plans.
Yet analysts said that US production was holding up despite lower drilling. "A rapid draw-down of the observed backlog of uncompleted wells could lead to higher production later this year and in 2016," Goldman Sachs said.