Crude declined as China’s oil processing grew the least in 18 months after government measures to cool the economy reduced fuel consumption, and as the dollar rebounded against the euro.
Oil dropped as much 3 percent following data from China Mainland Marketing Research Co. that showed refineries in the world’s biggest energy-consuming country processed about 8.5 million barrels a day in September. That’s a 6.6 percent gain from a year earlier, the smallest increase since March 2009. A rising U.S. currency curbs the investment appeal of commodities.
“The Chinese data has raised concerns about emerging market demand,” said Jason Schenker, the president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The dollar’s gain has contributed to today’s drop.”
Crude oil for December delivery fell $1.98, or 2.4 percent, to $80.56 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 1 percent from a year ago.
Brent crude oil for December settlement declined $1.71, or 2.1 percent, to $81.89 a barrel on the London-based ICE Futures Europe exchange.
The Chinese economy grew 9.6 percent in the third quarter and inflation accelerated to the fastest pace in almost two years. Consumer prices jumped 3.6 percent in September from a year earlier, the statistics bureau in Beijing said today.
The expansion in China’s gross domestic product is down from 10.3 percent in the second quarter and 11.9 percent in the first three months of the year.
‘The Disappointing Numbers’
“The Chinese numbers didn’t knock the socks off of oil traders,” said Phil Flynn, vice president of research at PFGBest in Chicago. “You’ve got a China demand premium built into the oil price. The disappointing numbers overnight, together with slower GDP growth, higher inflation and higher interest rates, are putting a damper on bullish sentiment.”
The central bank on Oct. 19 raised the benchmark one-year lending and deposit rates by 25 basis points, the first increase since 2007.
“It wasn’t the fundamentals that drove oil into the mid-$80s,” said Rick Mueller, director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Expectations were getting ahead of reality. The Chinese headlines were a signal that we can’t always count on their tremendous growth to support the market.”
Oil surged to $84.43 on Oct. 7, the highest intraday level since May 4, as the dollar extended its decline against the yen and euro and applications for U.S. unemployment benefits fell.
Dollar Increase
The U.S. currency rose 0.3 percent against the euro to $1.3926 today, after earlier dropping as much as 0.6 percent. The correlation between movements in oil and the euro has been 0.73 over the past year. A reading of 1 would indicate they move in lock-step.
“We’re starting to see a bit more of a focus on the fundamentals of the market,” said Michael Fitzpatrick, a broker with MF Global in New York. “We’ve traded with the stock market and the dollar lately, but those correlations are staring to break down.”
The Organization of Petroleum Exporting Countries will increase shipments by 1.2 percent in the four weeks to Nov. 6, according to Oil Movements, which monitors tanker charters. The group will ship 23.33 million barrels a day during the period, the Halifax, England-based consultant said in a report.
Global oil consumption typically rises in the fourth quarter as the Northern Hemisphere winter stokes demand for heating fuels.
Oil volume on the Nymex was 537,211 contracts as of 2:33 p.m. in New York. Volume totaled 750,891 contracts yesterday, 8.2 percent above the average of the past three months. Open interest was 1.41 million contracts.
SOURCE: Bloomberg
0 comments:
Post a Comment