Oil slips on poor data, euro zone worries

Oil slips on poor data, euro zone worries

London: Brent crude fell on Wednesday, dented by weak economic data in China and the United States, while euro zone debt worries also kept investors wary of holding demand sensitive commodities.

ICE Brent futures fell 60 cents to $108.43 a barrel by 0943 GMT, up from an intraday low of $107.84. US crude was down 96 cents to $97.05 a barrel.

Prices were also pressured as the dollar reached its highest in six weeks against a basket of currencies.

Oil, priced in dollars tends to weaken as the dollar strengthens, as it becomes less affordable to holders of other currencies.

“China is the main source of growth for oil demand, and that seems to be relatively weak, and other economic news is poor, and with the problems in the euro zone, it points to weakness for oil," said Christophe Barret, analyst at Credit Agricole Corporate and Investment Bank.

Also pointing to a weak economic outlook, Euro zone industrial new orders slumped in September from August, EU statistics showed, in their deepest fall since December 2008 and far worse than economists had forecast.

Euro zone debt problems were also in focus after a newspaper said France, Belgium and Luxembourg were in talks on how to provide temporary state debt guarantees for failed financial group Dexia.

J.P. Morgan reduced its forecasts for Brent and West Texas Intermediate (WTI) for 2012 on rising supply and as policy failures in the United States and Europe, and signs of weaker growth in China, have darkened the outlook for commodities in the next six months.

“The headwind of economic and financial market risks is turning into a gale at the same time that Libyan production is ramping up," J.P. Morgan analysts led by Lawrence Eagles said in a note.

The United States will release weekly government oil stocks data at 1530 GMT on Wednesday. US crude oil inventories fell unexpectedly last week as imports dropped, while gasoline stocks rose sharply.