(Corrects global daily output glut in paragraph 9 to 1 million
bpd, not 1 billion bpd)
* Slowing China economy raises concerns of stalling demand
* Declining U.S. output countered by ongoing global glut
* Oil may have bottomed, but full recovery not seen before
2017
By Henning Gloystein
SINGAPORE, March 9 (Reuters) - Oil prices dipped on
Wednesday, weighed down by a strengthening U.S.-dollar and
concerns over slowing demand, although falling U.S. production
lent crude markets some support.
U.S. crude futures CLc1 were trading at $36.46 per barrel
at 0219 GMT, down 4 cents from their last settlement, but still
almost 40 percent above February's 2016 and multi-year low.
International Brent crude futures LCOc1 were at $39.54 per
barrel, down 11 cents from their last close, but still some 40
percent above their January lows for this year.
The dips came as the dollar reversed recent losses against a
basket of leading currencies .DXY overnight, potentially
hampering oil demand as imports of dollar-traded crude get more
expensive.
But analysts said the main reason for the dip in prices and
at least temporary end to the rally was concern over faltering
demand in China, where the economy is growing at its slowest
pace in a generation.
"The recent oil rally is looking overextended ... China's
export data was horrendous," Matt Smith of Clipper Data said in
a daily report.
China's February trade performance was far worse than
economists had expected, with exports tumbling the most in over
six years.
Although China imported record crude volumes of 8 million
barrels per day (bpd) in February, analysts expect this figure
to fall as the government scales back purchases of strategic
reserves, and car sales begin to fall as the sharpest economic
slowdown in a generation starts to show results.
The price dips at least temporarily halted a price rally
that started in mid-February on hopes that a coordinated freeze
in production would stop growth in a global supply glut of at
least 1 million bpd above consumption that helped pull prices
down as much as 70 percent since 2014.
But OPEC-member Kuwait, this week poured cold water on hopes
of such a freeze by stating that it would only cap output if all
major producers participate, including Iran, which has balked at
the plan.
One key factor in determining the oil market balance will be
U.S. output, which the government said would be 8.19 million bpd
in 2017, down from over 9 million bpd currently.
But with demand growth also slowing, many analysts including
influential bank Goldman Sachs (NYSE:GS), say that it will take time for
markets to fully rebalance.
Energy consultancy Wood Mackenzie said that it expects "the
annual average (oil) price for 2016 being lower than 2015 and
then recovering in 2017, reflecting large oversupply and high
stock levels during the first half of 2016".
It added that the main risks to its forecast were changes in
demand in China and the extent to which Iran manages to increase
oil exports after sanctions against it were lifted in January.