The crude oil prices had reached to its highest level of this year but fell down on Monday when China announced that automobile sales had been dropped in the report. Sales in January have declined to seven months low which has raised concerns over the fuel demand, especially in China the second world largest oil user.
The international Brent crude futures opened at $66.20 per barrel during 0353 GMT later was down by 5 percent during its last closing hour. However, Brent had reached its highest level at $66.78 per barrel which was noticed as the highest level from November 2018 onwards.
Traders claim that a drop in Brent oil prices is because of weak automobile sale data by China.
While the U.S West Texas Intermediate (WTI) crude oil futures were almost at $55.82 a barrel which was increased by 32 percent from its previous close. Increase in the oil prices of WTI was noticed and was highest from November 2018 reaching at $56.13 a barrel, as on Monday.
In January, China’s automobile sale declined to around 15.8 percent compared to the same month data in 2018, the 2018 movement was continuous, and China observed its first annual decline of automobile sales and was a record one.
While in the same month, the new energy vehicle which included electric vehicles recorded increase in the sale of 140 percent, this further highlighted that the demand of oil for cars in China might reach the top level in the days to come.
Regardless of the information provided, due to a decrease in the oil supply that is planned by the Organization of the Petroleum Exporting Countries (OPEC) and other non-affiliated manufacturers like Russia, the global oil markets have held themselves strong.
Some oil producers companies of the countries in 2018 had decided that they will reduce the oil output by around 1.2 million barrels per day (bpd) in order to avoid a huge supply of growth.
The trade talks have positively impacted the beliefs in the markets due to improved negotiation and positive sign between the U.S and China.
Crude futures and financial market were hoping and backing each other; they believed that the trade conflict between the two largest economies the U.S and China would be resolved soon which had resulted in a slow down of global economic growth.
The crude prices have been approved by the U.S against the oil reporters and also with OPEC members of Venezuela and Iran.
In the previous week, energy companies of U.S had increased the oil rigs number which added for three more new rigs making it a total of 857, Baker Hughes, the energy services firm announced it in a weekly report on Friday.
Supply cut in the U.S is at a rise. In 2018, the crude oil production was cut by more than 2 million bpd and reached a record at 11.9 million bpd. There are hopes that the U.S will increase its output level in the years to come.
In the previous year only 800 oil rigs were operating in the U.S, and now they have been increased and are higher than 800 rigs.