UpdateCrude falls over $2/bbl on US and China economic worries

15 April 2013 07:04  [Source: ICIS news]

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By James Dennis

SINGAPORE (ICIS)--Crude values fell by more than $2.00/bbl on Monday morning amid concerns over the strength of both US and Chinese economies following the release of weak economic data from the world’ two leading oil consumers.

At 05:09 GMT, April Brent crude on London’s ICE futures exchange was trading at $100.93/bbl, down by $2.18/bbl from the previous close.

Earlier, the North Sea benchmark fell to a session low of $100.84/bbl, down by $2.27/bbl. ICE Brent prices are trading at their lowest levels since in July 2012.

April NYMEX light sweet crude futures (WTI) were trading at $88.75/bbl, down by $2.54/bbl from the previous close.

Earlier, the US benchmark fell to a session low of $88.46/bbl, down by $2.83/bbl. NYMEX WTI is trading at levels last seen in December 2012.

Crude prices were depressed on Monday following the release of disappointing growth figures from China for the first quarter of 2013.

China’s economy grew at 7.7% between January and March, which was below analyst’s forecasts of close to 8%.

In the fourth quarter of 2012 China’s economy had grown at 7.9%.

Industrial output in China rose by 8.9% in March compared with a year earlier. This figure was also down on forecasts which had been around 10%.

Weak data from China follows the release last Friday of disappointing US retail sales figures for March which revealed falls on the previous month.

According to the US Commerce Department domestic consumers expenditure totalled some $418bn (€318bn), which was down 0.4% on the previous month.

The lower retails sales affected all sectors including car sales, department stores and electronics retailers. The fall in retail sales as in-part attributed increases in taxes which came into effect earlier this year.

The fall in crude prices on Monday follow declines last week which were triggered by lower global oil demand growth forecasts for 2013 by both OPEC and the IEA.

Crude prices fell to lows last seen in late December amid the continued US budget crisis. Democratic and Republican leaders have been unable to reach agreement on proposed budget bills.

Meanwhile, looming automatic cuts totalling some $85bn (€65bn) are set to take effect on Friday.

There are fears that the US Government spending cuts could have a significant negative impact on growth in the world’s biggest economy.

China’s National Bureau of Statistics revealed that the official Purchasing Managers Index (PMI) for February hit a five month low to 50.1, down from 50.4 in January.

The data was worse than had been forecast and suggests that growth in China’s manufacturing sector declined amid lower domestic and overseas demand. A figure below 50 indicates a contraction in economic activity.

Meanwhile, statistics agency Eurostat revealed that the unemployment rate in the 17 nation eurozone climbed to a record high of 11.9% in January from 11.8% in December.

However, on a more positive note Eurostat also reported that inflation in the eurozone had decline to 1.8% in February. The figure was in line with the European Central Bank’s (ECB) inflation target.

($1 = €0.76)

By: James Dennis
+65 6780 4327

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