Oil below $80 as slow China chimes with Opec warning

London — Oil fell below $80 a barrel for the first time since 2010 on Thursday, as more evidence of a slowdown in China’s resource-hungry economy chimed with Opec warning of a substantial drop in demand next year.

Brent crude for December, which expires on Thursday, fell $1.03 a barrel to $79.35, its lowest since September 2010, before recovering slightly to around $79.50 by 1050 GMT. US light crude was down 40 cents at $76.78 a barrel.

Data from Beijing showed below-forecast factory output and investment growth hitting a near 13-year low, reinforcing signs that the world’s second-biggest economy will see its weakest growth for almost 24 years this year.

Share markets, however, were not put off, wagering that the China data could encourage more support measures from the Chinese authorities and the slide in oil could be a boost for growth worldwide.

European shares rose 0.4 per cent in opening trading in a small rebound from falls on Wednesday, and Asian and emerging markets shares had also inched higher.

But it was oil that remained the focus as it hovered at $79.85.

The Organisation of the Petroleum Exporting Countries, or Opec, said in its latest report on Wednesday that demand for oil was expected to drop by around a million barrels a day next year because of the US shale boom.

Its top producer, Saudi Arabia, also gave little away about whether it will cut output to remove surplus oil from the market, ahead of what is shaping up to be a landmark Opec meeting on November 27.

“There are not many bullish factors to lift the market now,” said Avtar Sandu, senior manager for commodities at Phillip Futures in Singapore. “But it’s not a one-way street down. Those who have been selling want to take profits around this area.”

In Europe’s bond markets, Italian and Spanish yields dipped as a downbeat survey from the European Central Bank underlined the need for further policy easing, though the euro bucked the trend, rising 0.2 per cent against the dollar. Safe-haven gold was at $1,160.76 per ounce, above Friday’s 4 ½-year low of $1,131.85, while growth-attuned metal copper rose 0.2 per cent to $6,694 a tonne on hopes for stimulus measures from China.

A benchmark index of Indian equities markets on Thursday closed trade provisionally 68.26 points, or 0.24 per cent, down as oil and gas, bank and metal stocks declined. The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange, which opened at 28,048.56 points, closed trade at 27,940.64 points (provisionally).