Crude oil, energy stocks slide on downbeat China data; Exxon hits lowest close since June

Crude oil futures eased lower Monday on renewed concerns over the outlook for global energy demand after economic data in China showed retail sales growth weakening unexpectedly in November, as well as profit-taking following last week’s strong gains.

China reported retail sales rose 3% in November compared with a year ago, below the consensus forecast of 4.6% and last month’s 4.8% increase, which may add pressure on policymakers who already have signaled stronger stimulus to boost the economy.

The data suggests China’s efforts to spark the economy are struggling to gain traction and that the government will need to do more to strengthen growth, adding to concerns over the oil demand outlook from the world’s top crude importer.

Concerns about Chinese demand outweighed threats of tighter sanctions on Russia and Iran, which along with mixed agency outlooks and a further draw in U.S. crude inventories contributed to last week’s gains.

“We feel last week’s events have been appropriately priced and that this week will be bringing fewer items capable of supporting oil prices,” Ritterbusch analysts said, adding any impact of the Federal Reserve’s upcoming interest rate decision likely would come from a weaker dollar in the near term that could slow oil price declines.

Front-month Nymex crude (CL1:COM) for January delivery settled -0.8% to $70.71/bbl, while front-month February Brent (CO1:COM) also closed -0.8% to $73.91/bbl, and U.S. Nymex natural gas (NG1:COM) settled -2% to $3.214/MMBtu.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

Oil and gas stocks (XLE) fell broadly, including a seventh straight loss at Exxon Mobil (XOM), -2.1% to its lowest close in six months; other large losers Monday included Phillips 66 (PSX) -5.2%, Marathon Petroleum (MPC) -5%, APA Corp. (APA) -4%, Devon Energy (DVN) -3.8%.

Barclays analysts lowered their 2025 fair value estimate for Brent crude to $83/bbl from $85/bbl, noting oil inventories remain low and the market is in backwardation.

Barclays now forecasts 2024 global demand growth of 900K bbl/day, down by 140K bbl/day from its previous forecast, with non-OPEC supply seen rising by 100K bbl/day.

The bank expects OPEC+ to extend production cuts for another quarter next year, with its current strategy giving it flexibility to “play the waiting game.”