Brent crude falls towards $102 on Chinese data
Supply side concerns also weighing on market
London: Oil futures eased to near $102 a barrel on Wednesday as fresh concerns over economic growth in the world’s top oil consumers, China and the United States, weakened the demand outlook.
The crude benchmark fell more than 7 per cent during April, its biggest monthly decline in 11 months, hurt by indicators suggesting the global economy remains in a fragile state.
Brent crude lost 20 cents to $102.17 a barrel by 0810 GMT, after falling the most in nearly two weeks on Tuesday. US oil was down 39 cents at $93.07 a barrel.
“It’s the same picture of relative slow demand,” Oliver Jakob, analyst at Petromatrix, said.
Growth in China’s manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
“Crude prices are down today because of the big stock increase in the API and the worse-than-expected China PMI,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Investors were awaiting the US ISM manufacturing data later on Wednesday after business activity in the US Midwest unexpectedly contracted in April to its lowest level since September 2009.
At a two-day meeting that wraps up on Wednesday, the Fed is widely expected to maintain its stimulus policy to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.
“There are going to be important macro movements over the next two days with the Fed, and the ECB (European Central Bank) meeting tomorrow,” Jakob said.
The ECB is widely expected to cut interest rates to a new record low of 0.5 per cent after data on Tuesday showed inflation in the euro zone has fallen to a three-year low and unemployment had hit a record of 12.1 per cent.
SUPPLY CONCERNS
The supply side also remained bearish .
Data from the American Petroleum Institute on Tuesday showed US crude stocks rose by 5.2 million barrels, larger than a forecast 1 million barrel increase.
The more closely-watched report from the Energy Information Administration (EIA) will be released at 1430 GMT.
Supply from the Organization of the Petroleum Exporting Countries is set to average in April 30.46 million barrels per day (bpd), up from 30.18 million bpd in March, a Reuters survey showed.
Saudi Arabia’s energy minister said on Tuesday the kingdom does not plan to expand its oil production capacity to 15 million barrels per day.
