Oil falls on Geithner comments, China slowdown

Oil falls on Geithner comments, China slowdown
AP
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First Published: Thu, Oct 21 2010. 02 43 PM IST
Updated: Thu, Oct 21 2010. 02 43 PM IST
London: Oil slipped back towards $82 per barrel on Thursday, consolidating after a sharp rise on a slight slowing in Chinese economic growth and following news of another build in US crude oil stocks.
Front-month US crude, from Thursday the December contract following November’s expiry, was down 36 cents at $82.18 by 2:53pm, after rising almost 3% on Wednesday. ICE Brent gained 2 cents to $83.62.
Oil posted its biggest daily%age gain in more than a month on Wednesday, after slumping more than 4% on Tuesday when China raised interest rates. Prices reached a five-month high of $84.43 on 7 October.
China’s economic growth slowed a little in the July-September quarter, growing at 9.6% year-on-year, down from 10.3% in the second quarter.
But Chinese growth was a touch stronger than expected and was accompanied by supportive oil demand data from what is now the world’s biggest energy consumer.
China’s implied oil demand rose 6.2% from a year earlier in September to about 8.68 million barrels per day (bpd), Reuters calculations based on preliminary official figures showed on Thursday, just short of a record-high 8.9 million bpd in June.
The growth rate, which eased off the double-digit base seen during early 2010, came on top of a strong base in September 2009, when demand rose at the fastest pace in three years.
China’s domestic crude production jumped 9% to a record 4.18 million bpd in September.
US crude oil inventories rose last week by a smaller-than-expected 667,000 barrels as imports increased, a weekly report from the federal Energy Information Administration (EIA) showed on Wednesday.
Distillate stocks were slightly bullish, falling more than expected, but gasoline inventories surprised analysts with a rise of 1.2 million barrels, weighing on the motor fuel market.
Christophe Barret, oil analyst at Credit Agricole, said the EIA figures painted a fairly gloomy picture for US oil demand with refinery runs remaining at a very low level.
“It is a little bit bearish in fact when you look at the numbers because what you have is a small increase in crude stocks and very very low refinery runs,” he said.
Oil markets were largely unaffected by comments by US Treasury Secretary Timothy Geithner, who said in a speech in South Korea that major world currencies were “roughly in alignment”.
The dollar strengthened immediately after the speech but then fell back and in early European trade was down about a third of 1% against a basket of currencies.
Oil found continuing support from expectations of US attempts to bolster the economy, probably through another round of quantitative easing.
A report from influential consultancy Medley Global Advisors said the Fed planned to buy $500 billion of Treasuries over six months and leave itself room for more buying.
France’s 12 oil refineries remained blocked on Thursday with fuel supplies from them still cut off, as workers continued strikes to protest against the reform of France’s pension system, the CGT union said.
A union leader called for strikes to be extended, with the government trying to restore fuel supply and senators just days away from voting on the pension reforms.
Several key oil and container ports in southern China were closed on Thursday ahead of Typhoon Megi, stopping bunker fuel deliveries and forcing tankers to evacuate to calmer waters, industry sources said.
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First Published: Thu, Oct 21 2010. 02 43 PM IST
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