Singapore: Oil fell for a second day on Thursday to below $77 after a slowdown in Chinese economic growth in the second quarter and US Federal Reserve minutes renewed concerns about the recovery of the world economy.
Annual gross domestic product growth in China, the world’s second-largest oil consumer, moderated to 10.3% in the second quarter from 11.9% in the first quarter, slightly below forecasts of 10.5% growth.
Front-month US crude fell as much as 54 cents to $76.50 a barrel and was down 42 cents at $76.62 at 0407 GMT, after touching a two-week high of $78.15 on Wednesday.
ICE Brent shed 34 cents on Thursday to $76.43.
“We believe the international economic recovery will continue, but it will be a fairly rocky road,” said David Moore, an analyst at the Commonwealth Bank of Australia.
“Sentiment is quite fragile and dependent on the economic data flow. The Chinese and US data will dominate the near term direction,” Moore said.
Prices this year have traded in a range of less than $23, peaking just above $87 in early May before tumbling to below $65 on 20 May.
The Chinese government has this year steered monetary and fiscal policy back to normal after a record credit surge last year to counter the global crisis.
Asian stocks virtually erased losses after the Chinese economic indicators showed concerns abut a steep slowdown in the world’s third-largest economy were overblown. Inflation at the producer and consumer level eased in June from May, reducing the need for further policy tightening.
But other data from China suggested that curbs on lending to home buyers and local authorities, along with an ebbing of government stimulus spending and an end to inventory rebuilding, were biting with greater force as the quarter drew to a close.
Oil market participants also awaited US economic indicators, including industrial output, due later on Thursday.
A bearish tone prevailed after Fed minutes on Wednesday showed officials last month felt they should be ready to consider additional steps to boost the US economy if an already softening outlook took a noticeable turn for the worse.
That countered news of a drop in US crude stockpiles, which last week plunged a greater-than-expected 5 million barrels for the second straight week, as crude imports declined and refinery demand rose, according to US Energy Information Administration statistics released on Wednesday.
Crude inventories at the key Cushing, Oklahoma delivery point for New York Mercantile Exchange oil futures rose 314,000 barrels to 36.1 million barrels. Gasoline and distillate inventories at a nationwide level rose more than expected, by 1.6 million barrels and 2.9 million barrels respectively.
BP Plc on Wednesday started a crucial test on its ruptured oil well in the Gulf of Mexico that could lead to halting the flow of crude that has polluted the ocean and shoreline since April.