Oil prices fall on China data

11th March 2013, Comments 0 comments

Global oil prices fell on Monday as Chinese industrial production showed signs of a slowdown in the world's biggest energy-consuming nation, analysts said.

In late afternoon London deals, Brent North Sea crude for delivery in April dropped 90 cents to $109.95 per barrel.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for April, shed 56 cents to $91.39 a barrel.

"Crude oil prices came under renewed pressure on Monday and started the week on the negative side following weak Chinese data that weighed on market sentiment," said analyst Myrto Sokou at the Sucden Financial brokerage in London.

"More specifically, China's inflation surged to a 10-month high in February while factory output and consumer spending missed analysts expectations."

She added: "Today, due to a lack of major economic data, currency movements could give some direction while equity markets have already set a bearish tone."

Official data released Saturday showed inflation in China hitting a 10-month high in February.

Industrial output, which reflects production at China's factories, workshops and mines, rose 9.9 percent year-on-year over the first two months of 2013, compared with 11.4 percent in the same period of 2012.

The disappointing economic data fuelled concerns about the outlook for the Asian powerhouse economy.

The oil market was meanwhile pulled lower also by the firmer dollar, which makes greenback-priced crude more expensive for buyers using weaker currencies.

"Oil prices are starting the new week of trading down," said Commerzbank analyst Carsten Fritsch.

The US Labor Department on Friday reported that the unemployment rate fell to 7.7 percent in February from 7.9 percent in January, and the country gained a better-than-expected net 236,000 jobs last month, raising hopes that the economy is strengthening.

Fritsch added: "Rather than benefiting... from the positive US labour market data and the resulting rosier demand prospects in the worlds largest oil consumer, oil prices are under pressure from a firmer US dollar and speculation about a premature end to the Feds bond purchasing programme.

"In addition, the majority of the Chinese economic figures published at the weekend proved disappointing. This illustrates how market players are currently focusing on negative information and the poor market sentiment."

Chinese energy demand has a major impact on the global oil market.

"Chinese data showing industrial production slowing has taken a toll on oil prices," added Jason Hughes, head of premium client management at IG Markets Singapore.

Victor Shum, managing director at IHS Purvin and Gertz in Singapore, agreed meanwhile that the pick-up in the greenback was also hitting prices.

"A booming oil supply, in combination with the strengthening of the dollar after a strong US jobs report last week, has caused some selling," he said.

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© 2013 AFP

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