BackOil slips toward $77 on China growth worries
Oil slips toward $77 on China growth worries
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Singapore: Oil fell towards $77 a barrel on Thursday as worries that China will take more measures to temper its booming economy overshadowed its return to double-digit growth for the first time since 2008.
US crude oil for March delivery, the new front-month contract, fell 10 cents to $77.64 a barrel by 1012 GMT on fears that tightening in China would slow consumption growth in the world’s second largest oil consumer.
London Brent crude fell 24 cents to $76.08.
China’s annual gross domestic product growth accelerated in the fourth quarter to 10.7% -- the fastest in two years -- from a revised 9.1% in the third, the National Bureau of Statistics (NBS) said on Thursday.
For all of 2009, China grew 8.7%.
“Investors will soon have to assess whether this report -- and others like it -- will be strong enough to allow the commodity rally to continue without alarming the authorities even further," MF Global analyst Edward Meir said.
World growth could falter as governments pull back some of the extraordinary liquidity they pumped into markets, the World Bank said on Wednesday.
In China, a 4 trillion yuan ($585 billion) stimulus package was complemented by an unprecedented surge in lending by predominantly state-owned banks last year.
But the government has signalled it will tighten credit in 2010, calling on banks to increase reserves and curb lending.
On Chinese oil data, the country’s December crude runs, or the amount of crude processed by refiners, jumped 24.8% from a year earlier to a record 8.15 million barrels per day. Runs were up 7.9% overall in 2009.
“For all of this year we are going to have a big focus on China because it will be the main driver of demand," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
“Because it is a command-style economy, things can change quickly. If the Chinese economy just goes boom, then we could go another step higher. For now, we still have too much inventory around and too much spare capacity."
US crude reached a 15-month high of $83.95 a barrel on 11 January. Prices are 47% below their July 2008 record high near $150, but have more than doubled from lows near $32 reached by the end of that year.
The dollar was boosted by the Chinese GDP data, rising to a five-month high against the euro. A stronger dollar tends to weigh on commodities like oil priced in the greenback as they become more expensive for holders of other currencies.
US inventories
In the US, an unexpected drop in crude stockpiles shown by an industry report had little impact on prices. The American Petroleum Institute (API) said inventories fell 1.8 million barrels last week against forecasts for a 2.4 million gain.
The nation’s distillate inventories, which include heating and diesel, dropped a larger-than-expected 3.4 million barrels. Supplies were forecast to have slid by 100,000 barrels, a Reuters survey showed.
Inventory data from the government’s Energy Information Administration (EIA) will be published on Thursday at 1600 GMT. Both weekly reports were delayed by a day because of a U.S. holiday on Monday.
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