Oil below $44 US on rate fears, China trade data

North American oil prices fell below $44 US a barrel on Monday, hurt by reports of China's economic slowdown and a high U.S. dollar.

West Texas Intermediate oil, the benchmark North American contract, was down by 43cents to $43.87 US a barrel on Monday at the close. Brent, the international contract traded in London, fell 17 cents to $47.25US a barrel.

Oil prices have been in decline for the last four trading days, after a strong U.S. jobs report and comments by Federal Reserve chair Janet Yellen pointed to a strong likelihood of a rate increase by the U.S. this year.

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A rate increase could push the American currency higher, making oil more expensive for the rest of the world.

The U.S. dollar is already higher in anticipation and the Canadian dollar was trading at 75.32 cents US.

There is also concern about reduced global demand as the world preparesfor the climate change summit in Paris.

China trade falls

And trade data out of China, the second largest economy, shows its demand for crude has gone into decline.

China's imports fell by 18.8 per cent in October from a year earlier, while exports shrank 6.9 per cent in a sign of weak global demand.

The oversupply of global crude as cut oil prices in half in the past year.

And there were fresh indications that the glut would continue, after Saudi Arabia signaled it has no plans to cut production at the December meeting of the Organization of Petroleum Exporting Countries.

"The only thing to do now is to let the market do its job," said Khalid al-Falih, chairman of the state-owned Saudi Aramco told the Financial Times. "There have been no conversations here that say we should cut production now that we've seen the pain."

In Canada, oil companies are pulling back from capital spending and major projects are being shelved as oil at these prices makes new development uneconomic.

What is oilsands future?

JeffRubin, an economist and the author of The Carbon Bubble, is predicting oilsands development may come to a halt, not just because the U.S. has rejected the Keystone XL pipeline, but also because there will be strict emissions controls in place after the Paris summit.

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Rubin, who in 2008 predicted oil would climb to $200 a barrel, wrote an opinion piece today saying oilsands crude will be too expensive to develop for years.

And before markets recover, the need to lower emissions will halt further development of the oilsands.

""It's a recognition that Paris is about reducing fossil fuel consumption. And in that world, in a world of falling oil demand and falling coal demand, is there room for high cost oil?" he said in an interview with The Exchange.