Oil prices fell in early Asian trading on Monday as Japan’s economy contracted on the back of falling exports and consumer spending, adding to fears that Asia’s biggest economies are starting to slow at the same time.
U.S. crude was trading at $42.07 per barrel at 0012 GMT, 43 cents below their last settlement and close to more than six-year lows. Brent futures were at $48.69 a barrel, down 50 cents but still some way off from their 2015-low of $45.19.
Japan’s economy, the second biggest in Asia and number three in the world, shrank at an annualised pace of 1.6 percent in April-June as exports slumped and consumers cut back on spending.
The slowdown in Asia’s biggest economy, China, and its impact on the region have also heightened the chance that any rebound in growth in July-September will be modest, analysts say.
The weak economic data comes at a time when production around the world remains at or near record highs.
“OPEC is expected to boost crude oil production to 33 million barrels day, the most ever, after international sanctions are removed against Iran. Oman, the biggest non-OPEC oil producer in the Middle East, has also increased its production. Oman pumped one million barrels per day in July, a 0.5 percent increase from June’s daily output level,” ANZ bank said on Monday.
Production in Russia and the United States also remains near records.