• Home
• /
• Energy

Oil falls to $112, demand concern weighs

LONDON - Oil fell to around $112 a barrel on Friday as a slowdown in China’s trade flows and weaker forecasts from the International Energy Agency added to concern about demand, offsetting hopes of stimulus measures aimed at lifting global growth.

Underscoring a weaker oil demand picture, the Paris-based IEA, which advises 28 industrialised countries, reduced its estimate for global oil demand growth in 2013 by 150,000 barrels per day in a monthly report.

Brent crude for September delivery was down $1.20 to $112.02 by 1023 GMT, having traded as low as $111.46 earlier in the session. U.S. crude was down $1.05 to $92.31.

Data on Friday from the second-largest oil consumer, China, showed July exports rose just 1 percent from a year ago, suggesting pro-growth policies have been slow to gain traction and more urgent action may be needed.

“The trade balance data missed the mark, raising the question of commodities demand in the second half, and provided some downside to commodities prices,” said Tim Waterer, a senior trader at CMC Markets in Sydney.

Oil is still set to rise for a second week, supported by improved jobs data in the No. 1 oil user the United States, supply concerns and optimism about the prospect of monetary easing policies in the euro zone and China.

The cut in the IEA’s 2013 oil demand growth forecast came a day after producer group OPEC said it may have to reduce its own oil demand growth estimate for next year by 20 percent due to a weak economic outlook.

A drop in North Sea output due to a heavy period of oilfield maintenance and tension in the Middle East are supporting Brent, widening its premium to U.S. crude to nearly $20 a barrel, the most since mid-May.

North Sea crude underpins the Brent contract, which is used to price oil in the Middle East, Europe, Africa and Asia. North Sea supply is set to plunge 17 percent in September, adding to signs of a shortage that may artificially lift Brent.

On the weather front, traders were watching out for any signs of disruption to Gulf of Mexico oil and gas installations due to the hurricane season. So far this year, the impact has been relatively limited.