Singapore: Brent fell 32 cents to $124.70 a barrel on Friday, after settling at a 31-month high in the previous session, on concerns that slowing growth in top consumer United States may pare demand, but a weaker dollar helped stem a slide in prices.
Still, US crude is heading for a rise of 5.7% in April, marking its eighth consecutive month of gains, and the longest run of monthly increases since 1983, Reuters data shows.
A weak dollar, wallowing at three-year lows, helped bolster silver and gold within sight of historic highs on Friday as investors sought alternative assets. On the other hand, US economic growth braked sharply in the first quarter as higher food and gasoline prices dampened consumer spending and sent inflation rising at its fastest pace in 2-1/2 years.
“The two pieces of news have counterbalanced each other, helping keep oil steady,” said Victor Shum, an analyst at Purvin & Gertz. “Oil had risen somewhat, and some pullback from that point was not unexpected.”
NYMEX crude for June fell 44 cents to $112.42 a barrel by 12:00pm, after settling at $112.86. Brent fell as much as $124.50 a barrel, after ending at $125.02.
US crude futures rose on Thursday to hit a 31-month high settlement after a volatile trading session. US gasoline futures surged for a sixth straight session, pushing prices to their highest since July 2008, as the world’s top consumer gears up for driving season.
Growth in the US gross domestic product slowed to an annual rate of 1.8% after a fourth-quarter pace of 3.1%, the Commerce Department said. Economists had expected a 2% pace.
HSBC’s China Purchasing Managers’ Index clung near seven-month lows in April as output growth cooled, with the slowdown helping to tame factory inflation to an eight-month trough.
Friday’s data by no means signalled that China’s vast manufacturing sector is grinding ever slower. Instead, it suggests factories in the world’s second-biggest economy are growing steadily rather than booming.
Brent may fall to $123 a barrel as a bullish target of $128.49 per barrel has been aborted as it failed a resistance at $126.28, Reuters market analyst Wang Tao said. US oil has dropped to a $110.71-$113.48 range, and its technical signals are neutral, he said.
Oil prices will continue to trade “sideways” in the next few days, staying supported at current levels because of fears the geopolitical unrest will spread to other countries in the Middle East, Shum said. Prices would stay around current levels despite concerns of slowing demand because investors have few options to park their money, he said.
“Any aggressive exit by is unlikely because what are the alternatives for investors?” Shum said. “If the global economy tanks, stocks will go down. Oil will stay supported because of geopolitical risks.”
Syrian President Bashar al-Assad faced rare dissent within his Baath Party and signs of discontent in the army over violent repression of protesters that a rights group said on Thursday had killed 500 people.
Libya’s two-month civil war spilled over the border into Tunisia, while rebels in Misrata said only NATO could halt the bombardment of the besieged city. The struggle between forces loyal to Libyan leader Muammar Gaddafi and rebels trying to end his rule of more than four decades drew in outsiders last month, as NATO began air strikes on government troops under a United Nations mandate.
“With renewed buying being seen from Asian customers, we continue to see upside price risks in the environment, unless more concrete action from Opec members is forthcoming,” J.P. Morgan analysts led by Lawrence Eagles said in a report.