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Brent falls as China GDP, euro zone weigh

Brent falls as China GDP, euro zone weigh
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First Published: Tue, Oct 18 2011. 04 54 PM IST
Updated: Tue, Oct 18 2011. 04 54 PM IST
London: Brent crude futures slid below $110 a barrel on Tuesday, paring earlier gains, after weaker Chinese third-quarter economic growth prompted concern about future demand from the world’s second-largest oil consumer and as Moody’s warned France of a negative outlook.
Brent crude fell by 61 cents to $109.55 a barrel by 1040 GMT, having plumbed lows under $108.92 a barrel earlier. US crude lost 26 cents to $86.12, a day before the front-month November contract expires.
China’s annual economic growth eased to 9.1% in the third quarter from 9.5% in the previous quarter; and slightly below market forecasts of 9.2% as tight domestic monetary policy and easing foreign demand crimped activity.
Reuters calculations suggest implied oil demand in China rose just 1% in September from a year earlier to about 8.9 million barrels per day, its slowest rate of growth so far this year.
“This morning the focus is on China, GDP was slightly lower than expected and the oil-specific numbers were very disappointing,” Olivier Jakob from Petromatrix said.
Trouble in the euro zone showed no signs of let-down with France insisting its triple-A credit rating was safe despite a warning shot from ratings agency Moody’s but it acknowledged growth would probably miss its target.
“I think the market overreacted last week but now because the Germans said we haven’t got a solution, people are beginning to reconsider their optimism and so we are looking to see prices fall,” said Roy Jordan of Facts Energy Global.
Euro zone leaders offered a glimmer of hope on Tuesday as officials said they were likely to agree to leverage their bailout fund at a summit on Sunday by allowing it to guarantee a portion of newly issued euro zone debt.
Brent settled $2.07 lower on Monday after Germany’s finance minister said the European Union summit would not produce a quick fix to the euro zone debt crisis.
Wolfgang Schaeuble’s comments continued to weigh on sentiment, sending European stocks and commodities lower on Tuesday.
Brent could fall to $108.81, while U.S. crude may have peaked at the previous session’s high of $88.18, and a short-term downtrend may develop, according to Reuters market analyst Wang Tao.
SUPPLY ISSUES
Crude oil prices were supported by lower Angolan crude production expected in December, with sources saying the country will export around 1.69 million barrels per day (bpd) of crude oil in December, from 1.84 million bpd originally scheduled to load in November.
Angola will export around 1.69 million barrels per day (bpd) of crude oil in December, trade sources said on Monday, down from 1.84 million bpd originally scheduled to load in November.
A Reuters poll ahead of weekly inventory reports forecast a 1.9 million barrel increase in US domestic crude stocks.
Distillate stocks were projected down 1.4 million barrels and gasoline supplies were seen down 900,000 barrels, while refinery utilization was likely off 0.2 percentage point, the poll showed.
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First Published: Tue, Oct 18 2011. 04 54 PM IST
More Topics: Markets | Oil | Brent | Crude | Dollar |