London: Brent crude fell on Wednesday, pressured by European debt concerns which outweighed a boost from cooling Chinese inflation data which had soothed fears of a sharp slowdown in the world’s second largest oil consumer.
Brent crude was down 24 cents at $114.76 a barrel by 2:54pm, after reaching its highest close since 15 September on Tuesday. U.S. crude traded 58 cents lower at $96.23 a barrel.
Brent was well off the day’s high of $115.75, as Berlusconi’s declaration that he would resign did not stop worries about Italy’s ability to service its debt.
“The euro mess is not over yet and LCH increasing margins on the Italian debt is not helping,” said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.
Europe’s sovereign debt crisis was cited by Opec as a risk to expectations for demand growth in the producer group’s 2011 World Oil Outlook.
However Brent was over $15 higher than a low reached on 4 October, and the broad macro-economic picture was supportive.
China’s inflation rate eased to 5.5% in October, a third straight month of decline from July’s three-year peak, and Premier Wen Jiabao said prices have fallen further since then.
The country’s industrial production grew 13.2% in October from a year ago, slightly slower than expected but enough to affirm expectations that the world’s second-largest economy is not battling a severe slowdown right now.
“The data is bullish for oil as it indicates that there will be no hard landing for the Chinese economy,” said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong.
However pointing to the limited oil demand in China, refinery throughput fell 0.9% from a year earlier to 8.74 million barrels per day (bpd), the second decline this year, as planned and unexpected shutdowns cut into operations.
A United Nations’ International Atomic Energy Agency report said Iran had worked on developing a nuclear weapon design and other research and testing relevant for such weapons.
However, concerns of a disruption in supply from Iran stemming from the dispute eased after a United States official said any sanctions imposed on Tehran were unlikely to target its oil and gas sector.
“There is some Iranian premium in the market,” Jakob at Petromatrix said. “If the US does not react too strongly to the IAEA than could see some profit taking on the length that has been put on for the IAEA report.”
In the United States, crude oil inventories rose only 148,000 barrels last week, industry group American Petroleum Institute said, compared with expectations of a 400,000-barrel rise in a Reuters survey.
Gasoline stocks unexpectedly fell 1.5 million barrels and distillate stocks fell 2.9 million barrels, steeper than expectations for a 2 million barrel decline.
Investors were awaiting the closely watched Energy Information Administration data released at 9:00pm.
US crude oil inventories likely rose for a third straight week due to higher imports while distillate stockpiles were seen falling, an expanded Reuters poll of analysts showed on Tuesday.