Oil prices fall as China inflation rockets

15th April 2011, Comments 0 comments

Crude prices fell Friday, weighed down by a sharp inflation rise in China, the world's largest consumer of energy, and as the market awaited a weekend presidential vote in oil exporter Nigeria.

New York's main contract, light sweet crude for delivery in May, dropped 25 cents to $107.86 a barrel.

Brent North Sea crude for June delivery shed 20 cents to $121.80 in London trade.

"The news from China today is having a dampening effect on oil prices because the market is expecting the Chinese government to raise (interest) rates" following the inflation data, said Thina Saltvedt, analyst at Nordea Bank Norge.

China on Friday said its inflation had hit a 32-month high, suggesting Beijing's efforts to rein in soaring costs are still falling short.

China's consumer price index rose 5.4 percent year-on-year in March -- the fastest pace since July 2008 and well above the government's 2011 target of four percent -- and 5.0 percent in the first quarter.

The oil market was also looking ahead to weekend elections in Nigeria, a key exporter of crude but which is regularly hit by supply disruptions owing to unrest between rebels and the African nation's government.

"Any political unrest created from the polls in Nigeria could further increase the geopolitical risk and may retrace recent losses in the price of oil," said Nick Campbell, an analyst at energy consultants Inenco.

Nigeria votes for a president Saturday in what may be a historic moment for Africa's most populous nation as it bids to end years of vote-rigging and hold its cleanest polls for head of state in two decades.

An enormous effort has been undertaken to organise a fair vote and break with a series of deeply flawed ballots, but violence poses a serious risk, with bomb blasts and other attacks having killed dozens in the run up to polls.

The clear favourite is President Goodluck Jonathan, who has had an almost accidental rise to power that culminated with him being thrust into office last year following the death of his predecessor, Umaru Yar'Adua.

His main challenger is ex-military ruler Muhammadu Buhari, whose reputation as a stern anti-corruption figure in one of the world's most graft-ridden nations has won him significant backing.

The oil-producing Niger Delta region, hit by years of violence, has meanwhile seen relative calm following a 2009 amnesty deal, but the situation remains fragile, and many have warned of a likely eventual return to unrest.


© 2011 AFP

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