Singapore: Oil slid on Friday following data showing weaker-than-expected Chinese industrial output for May, though investor confidence in the country’s growth helped prices hold above $75, headed for a weekly gain of 5%.
China, the world’s no. 2 oil user, is driving crude demand growth as consumption from European economies has been slow to recover. The nation’s overall exports surged 48.5% last month, official data showed on Thursday.
But statistics released on Friday showed China’s industrial output rose 16.5% in May, compared with expectations for a 17.1% increase.
US crude for July declined 31 cents to $75.17 a barrel at 0320 GMT, after settling at the highest level in four weeks on Thursday. This week’s gain would be just the second one in six. ICE Brent fell 26 cents to $75.03.
“I wouldn’t turn around and start selling,” said Clarence Chu, an energy trader at Hudson Capital Energy in Singapore.
“It’s slightly disappointing, but I expect support around $75. It had been a resistance level and yesterday we finally broke through. The magnitude of the exports swing is so big that the margin of error for industrial production is also big.”
Oil prices rose above $75 for the first time since June 4 on Thursday on strong Chinese export data and the International Energy Agency’s raised global oil demand forecast.
“The Chinese trade numbers really boosted sentiment among investors and revived confidence that there will be a global economy recovery despite the euro zone debt crisis,” said Serene Lim, a Singapore-based oil analyst at ANZ.
The Paris-based IEA revised up its estimate of 2010 global oil demand growth this year due to increased fuel use in the United States and on higher Chinese consumption.
The IEA raised its global oil demand growth forecast for 2010 by 70,000 barrels per day to 1.68 million bpd, saying demand would hit 86.44 million bpd, up from 84.76 million bpd in 2009.
Oil inventories at the Cushing, Oklahoma, crude oil hub and pricing point for benchmark US crude rose 111,186 barrels in the week to June 8 to a record 40 million barrels.
Asian stocks rose for a fourth day on Friday on optimism that the world economic recovery was on track despite Europe’s debt woes, while the euro was steady after a rally the previous day.