OIL FUTURES: Nymex Crude Falls on Global Demand Fears

Date : 08/10/2012 @ 10:03AM
Source : Dow Jones News

OIL FUTURES: Nymex Crude Falls on Global Demand Fears

--China crude-oil imports slide to lowest level since December

--IEA lowers 2013 global oil-demand forecast by 0.2 million barrels a day

--Brent-WTI spread holds highest level since April, near $20

   By Nicole Friedman 

NEW YORK--Crude-oil futures slipped Friday as disappointing Chinese data and a revised International Energy Agency forecast fueled concerns about global oil demand.

Light, sweet crude for September delivery was recently down $1, or 1.1%, at $92.36 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe fell $1.23, or 1.1%, to $111.99 a barrel.

China's trade surplus fell to $25.1 billion in July, a drop from June's $31.7 billion and well below the forecasted $35.2 billion.

China, the world's second-largest oil consumer, reported its lowest level of crude-oil imports in nine months.

"The fact that oil imports are declining is very supportive of the view that the main economic growth engine of the world is actually slowing," said Dominick Chirichella, oil analyst with Energy Management Institute, in a note to clients.

Worse-than-expected Chinese data have actually supported oil prices in the past, as traders have hoped the poor metrics would prompt the Chinese government to implement new stimulus measures to boost economic growth. However, "the steady stream of negative news out of not only China but the U.S. and Europe as well has become so great that it is finally trumping stimulus-led expectations for growth," brokerage Tradition Energy said in a note.

The IEA, an energy watchdog based in Paris, lowered its forecast for 2012 global oil-demand growth to 0.8 million barrels a day from one million barrels a day.

The monthly report, released Friday, incorporates new 2010 non-Organization for Economic Cooperation and Development data showing demand was weaker than previous thought, especially in China, Russia and the Middle East.

But because the new data adjust the baseline demand levels, the statistics are difficult to compare with past reports, said Barclays analyst Miswin Mahesh in a note to clients.

West Texas Intermediate crude oil, the U.S. benchmark traded on Nymex, is currently priced at $19.75 a barrel below Brent--its biggest discount to the European benchmark since April. Supply concerns have boosted Brent, as scheduled maintenance in the North Sea is expected to lead to a decline in loadings in the short term.

However, "the current width of the spread is hard to justify based on oil market fundamentals and is likely to be only a short-term phenomenon," said JBC Energy, forecasting the price difference would narrow by the end of the year.

Front-month September reformulated gasoline blendstock, or RBOB, recently fell 1.70 cents, or 0.6%, to $2.9838 a gallon. September heating oil fell 2.21 cents, or 0.7%, at $3.0229 a gallon.

Write to Nicole Friedman at nicole.friedman@dowjones.com

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