Oil fell yesterday over signs that US shale drillers have adapted to lower prices and on renewed indications of economic weakness in Asia where refiners are already trimming crude runs.

Brent crude was trading at $46.26 per barrel at 1042 London time, down 50 cents from its last settlement. US West Texas Intermediate (WTI) crude was down 57 cents at $44.84 a barrel on the futures market.

Physical markets were also under pressure. Rising Canadian oil flows are having difficulty finding space in pipelines, weighing on Canadian prices, now at a $15 discount to WTI.

Iran set the official selling price of its light grade for Asia at $0.45 above the Oman/Dubai average for August, down 40 cents on the month.

Traders said the lower prices were a result of Asian refiners beginning to cut crude orders, and also to the region’s economic slowdown.

“Economic run cuts are finally starting in a few markets, but more may be needed ... The implied, but delayed, ripple effect into crude demand is not helpful for oil balances and prices,” Morgan Stanley said.

Several Asian refiners are maintaining or reducing crude throughout in July and August after refineries around the region in the first quarter binged on the cheapest crude in over a decade.

China’s economic growth likely cooled to a fresh seven-year low of 6.6 per cent in the second quarter, according to a Reuters poll of 61 economists, its weakest in seven years.

But, supportive to prices, Iraq, the second largest producer in the Organization of the Petroleum Exporting Countries, has suspended loadings of its Basrah light crude following a pipeline leak, sources said.

It was unclear how long the pipeline repair would take, the sources added.

US investment bank Jefferies sees the oil market establishing a solid base for higher prices ahead and forecasts prices at $70 a barrel late 2017/early 2018.

“We believe that the oil market is in the early stages of a sustainable but protracted recovery.”

“Supply/demand balances will transition to balance and then under-supply in the back half of 2016,” the bank said, but warned that prices may not fully react to under-supply until inventories draw to more “normal levels”.

Evidence that US producers can live with crude of $45 or higher came as drillers added rigs for the fifth week in six, US oil bankruptcies became sparse in June, and bullish US oil bets dropped to near four-month lows.

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