Oil market under pressure from China demand fears

25th July 2013, Comments 0 comments

World oil prices steadied on Thursday, remaining under pressure from concerns about an economic slowdown in top energy consumer China, analysts said.

New York's main contract, West Texas Intermediate (WTI) for September, dropped ten cents to $105.29 a barrel.

Brent North Sea crude for delivery in September rose 27 cents to stand at $107.46 a barrel in late afternoon deals in London, having earlier fallen on Chinese jitters.

"China has been and remains the key driver of global oil demand, the dynamism of which has this year been lagging considerably behind the expansion of supply," said Commerzbank analysts in a research note to clients.

"Weaker demand from China would thus cause the oversupply to increase even further.

"Financial investors clearly see this as an opportunity to grab profits, so the oil price is likely to remain under pressure for the time being."

Sucden analyst Myrto Sokou added that New York oil prices were also under pressure following publication of weaker-than-expected US jobless claims data.

New York crude had already dived by almost $2 on Wednesday after HSBC's preliminary purchasing managers index of Chinese manufacturing activity hit an 11-month low, signalling weaker demand in the world's top energy consuming nation.

"We are seeing a continuation of last night's pullback in crude prices over the weak Chinese data," Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.

The sluggish reading in China overshadowed upbeat economic data in the eurozone, where private business activity returned to growth in July for the first time for 18 months.

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© 2013 AFP

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