Oil prices dipped on Monday, weighed down by expectations that China will report its weakest economic growth in almost three decades amid waning domestic demand and painful US tariffs.

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Still, analysts expect oil prices to be relatively well supported this year by supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia.

International Brent crude oil futures were at $62.30 per barrel at 0022 GMT, down 40 cents, or 0.6 percent, from their last close.

US West Texas Intermediate (WTI) crude futures were down 37 cents, or 0.7 percent, at $53.43 a barrel.

US bank J.P. Morgan said there were ongoing signs of economic uncertainty.

“The global outlook remains murky, despite emerging positives from a dovish Fed (now boosting US mortgage applications), faster China easing (China credit growth stabilising) and a more durable US-China truce,” it said.

Despite this, analysts said supply cuts led by OPEC would likely provide crude oil prices with support.

“Brent can remain above $60 per barrel on OPEC+ compliance, expiry of Iran waivers and slower US output growth,” J.P. Morgan said.

It recommended investors should “stay long” crude oil.

Researchers at Bernstein Energy said the supply cuts led by OPEC “will move the market back into supply deficit” for most of 2019 and that “this should allow oil prices to rise to US $70 per barrel before year-end from current levels of US $60 per barrel.”

In the United States, energy firms cut 21 oil rigs in the week to January 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.

It was biggest decline since February 2016, as drillers reacted to the 40 percent plunge in US crude prices late last year.

However, US crude oil production still rose by more than 2 million barrels per day (bpd) in 2018, to a record 11.9 million bpd.

With the rig count stalling, last year’s growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

First Published:Jan 21, 2019 6:45 AM IST