Oil prices drop after weak Chinese data

April 10, 2014
Oil prices drop after weak Chinese data/AFP
Oil prices drop after weak Chinese data/AFP

, LONDON, April 10- Oil prices fell on Thursday after weak Chinese trada data, but losses were curbed by upbeat US demand and lingering doubts about the full resumption of Libyan exports, analysts said.

New York’s main contract West Texas Intermediate (WTI) for May delivery dipped nine cents to $103.51 a barrel.

Brent North Sea crude for May slid 42 cents to stand at $107.56 a barrel in London late morning trade.

Government data on Thursday showed Chinese imports slumped 11.3 percent year on year to $162.4 billion in March while exports fell 6.6 percent to $170.1 billion, resulting in a trade surplus of $7.7 billion.

The numbers may raise further concerns about the health of China’s economy, which has shown signs of weakness recently with a string of disappointing indicators, including on industrial production and consumer spending.

“The weak exports highlighted a possible further contraction in the nation’s manufacturing sector … thereby trimming demand prospects for crude oil,” said Tan Chee Tat, investment analyst at Phillip Futures.

“Decline in imports offered more confirmation on China’s decreasing economic activities, denoting lower demand for raw materials and intermediate products,” he said.

Sanjeev Gupta, the head of the Asia Pacific oil and gas practice at consultancy firm EY, said oil prices retained upside pressure from signs of robust gasoline demand in the United States, the world’s biggest economy.

The latest official US supply report showed a drop of 5.2 million barrels of gasoline supplies, much more than the 700,000 barrel decline that had been projected.

Gupta said that “delays in the revival of supply from Libya” also supported oil prices.

Investors remain cautious over a weekend deal between rebels in eastern Libya and the central government to resolve a nine-month oil blockade.

On Wednesday, rebels handed over to the Libyan army the first of two terminals currently under their control, enabling exports to be resumed as early as Sunday.

Tripoli says the blockade since July has cost Libya more than $14 billion in lost revenues, slashing exports from 1.5 million barrels per day to 250,000 bpd.

Analysts said oil prices remained propped up also by the heightened tensions in eastern Europe.

With Ukraine a key conduit for Russian gas to Europe, traders fear that any armed conflict will disrupt supplies and send oil and gas prices skyrocketing.

Russian deliveries account for 34 percent of the natural gas supplies to the European Union, according to the Soufan Group, a US-based intelligence firm.


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