Wknd. KTBuzzon Inspired Living Indulge City Times KT Mobile KT ePaper KT Competitions Subscribe KT
Khaleej Times
Khaleej Times Google Plus Page Khaleej Times Facebook Page Khaleej Times Twitter Page Khaleej Times RSS Feeds
   
  UAE Sports
  Cricket
  Football
  Horse Racing
  Tennis
  Sports Talk
   
   
  wknd.
  Indulge
  Inspired Living
   
   
  Classifieds
  Properties
  Appointments
  Used Cars
   
Business Home > Energy
 
Oil dips under $112, Chinese data worries

(Reuters) / 11 May 2012

Oil fell below $112 a barrel on Friday after a weak reading of industrial growth in China sparked worries about demand growth from the world’s number two oil consumer.

China’s industrial production in April grew at its slowest pace in nearly three years, which along with poor trade numbers on Thursday, suggest the world’s No. 2 economy continues to slow down after a weak first-quarter performance.

“This morning, the continuation of softer Chinese data relative to market expectations has weighed on prices further,” Barclays analysts said in a note.

“The confused aftermath of the Greek election, ongoing concerns about the Spanish banking system and sovereign debt, weaker Chinese data and OPEC members continuing to pump at record levels keeps pressure on prices.”

By 1242 GMT, Brent June futures lost 92 cents to $111.80 a barrel. The benchmark, which fell to a three-month low on Monday, is headed for its second week of losses.

The U.S. light sweet June contract dropped $1.25 to $95.83 a barrel, resuming its downturn after ending a six-day slide on Thursday. U.S. crude is also on track for a second straight week of decline after touching its lowest level since mid-December on Wednesday.

Markets were also rattled by an unexpected $2 billion trading loss at Wall Street giant JP Morgan, which pushed jittery investors away from risky assets.

“The news out of JP Morgan last night started global markets on the weak side while Chinese numbers were not that good,” said Olivier Jakob from Zug-headquartered Petromatrix.

China’s implied oil demand fell in April to its lowest in six months and showed the first year-on-year decline in at least three years, as refineries scaled back crude runs to undergo maintenance.

The data highlights the potential impact on China from the ongoing crisis in the euro zone, where Spain and Greece continue to fight mounting debt problems.

Global demand growth this year will remain broadly unchanged, the International Energy Agency (IEA) said in its monthly report, raising it by just 20,000 bpd from its previous report to 790,000 bpd.

The agency expects prices to remain high due to nuclear tensions between the West and Iran, despite a dramatic improvement in world supply resulting in a big build in stocks.

WEAK OUTLOOK

An improved global supply scenario is also weighing on oil prices. The Organization of the Petroleum Exporting Countries pumped 1.62 million barrels per day above its supply target in April, filling gaps caused by a large number of supply outages globally. Analysts are however warning that OPEC could trim output in response to swelling stockpiles.

“The unusually large global inventory builds in the first half of 2012 will lead to a prolonged slump in the need for OPEC oil, requiring substantial cuts in OPEC’s output,” Leo Drollas, chief economist for Centre for Global Energy Studies told an industry conference in Singapore.

“These will come about, but not quickly enough to prevent the price of oil from sagging.”

Brent hit highs above $128 in March amid fears about supply disruptions from key producer Iran following Western sanctions.

VTB Capital’s Andrey Kryuchenkov sees Brent supported at $112, with key short-term support at $110-$110.5, but does “not expect sustained gains at the moment”.

 

Comments
comments powered by Disqus