Oil started the week with a rise in prices but gave up its gains Monday after Saudi Arabia said its ongoing investments in energy projects and diesel consumption in China had dropped for a fourth consecutive month. Saudi Arabian Oil Co., also known as Saudi Aramco, refuses to reduce its production capacity amid lower crude prices sending futures down by as much as 4.1 percent in New York.
Diesel use in China fell by 5.6 percent in December compared with a year earlier and gasoline consumption grew at the slowest pace in more than two years.
China Demand Down
Oil resumed its decline after the biggest two-day rally in more than seven years amid concerns over continued U.S. stockpiles, production from Saudi Arabia and Russia and Iran’s reentry into to the market following the removal of sanctions. Equally bearish is the slowing demand in China.
West Texas Intermediate for March delivery dropped as much as $1.33 to $30.86 a barrel on the New York Mercantile Exchange and hitting $31.21 at 11:34 a.m. London time. Total volume traded was more than double the 100-day average while front-month prices rose 21 percent over two sessions at the close Friday after the February contract expired Wednesday at $26.55 a barrel, the lowest since 2003.
Brent for March settlement lost as much as $1.46 or 4.5 percent, to $30.72 a barrel on the London-based ICE Futures Europe exchange. The contract gained $2.93, or 10 percent, to $32.18 Friday after prices showed an advancement of 11 percent last week. The European benchmark crude was at a premium of 10 cents to WTI.