Oil drops on China’s economic slowdown

July 15, 2013
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New York's main contract, West Texas Intermediate crude dropped 66 cents to $102.98 a barrel/AFP
New York’s main contract, West Texas Intermediate crude dropped 66 cents to $102.98 a barrel/AFP

, LONDON, July 15 – World oil prices fell on Monday on news of an economic slowdown in top global energy consumer China, analysts said.

Brent North Sea crude for delivery in August slipped 60 cents to stand at $108.21 a barrel in London midday deals.

New York’s main contract, West Texas Intermediate (WTI) for August, dipped 67 cents to $105.28 compared with Friday’s closing level.

“Crude oil prices slid lower on Monday, opening the week on the negative side, as disappointing Chinese economic data hurt market sentiment and limited risk appetite, prompting investors to lock in recent gains,” said Kash Kamal at Sucden brokers.

“The fairly poor Chinese data verified concerns about a slowdown in the Chinese economy which could result in a lack of oil demand in the third quarter of 2013,” he added.

China’s gross domestic product expanded 7.5 percent in the April-June quarter, official data showed on Monday, a second consecutive slowdown in growth. That was slower than the 7.7 percent growth in the previous three months.

The in line reading provided brief support for oil prices on Monday, before profit taking set in.

Brent rallied to $109.17 a barrel, attaining the highest point since early April, while New York crude came close to recent 15 month highs.

“The main thing is that it didn’t miss the estimates,” Kelly Teoh, market strategist at traders IG Markets in Singapore, told AFP.

While the second quarter figure is in line with a median forecast of 10 economists surveyed by AFP, it follows a series of weak numbers pointing to trouble in the Asian giant, with analysts saying it could miss Beijing’s 2013 target.

Beijing unveiled figures also showing an increase in wages, which Teoh said was in line with the government’s efforts to boost domestic consumption as an economic driver to take up the slack from slowing exports.

She also pointed to a 13.3 percent year on year rise in retail sales in June as a positive sign for domestic demand.

The oil market was later on Monday set to digest a raft of key economic indicators in the United States, which is the world’s top crude consuming nation.

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