Oil futures slip as China data points to slower growth
BY DAN STRUMPF
NEW YORK -- Oil futures slipped on Monday after disappointing economic data from China reignited concerns about slowing oil demand in the world's second-biggest crude consumer.
Light, sweet crude for August delivery fell 18 cents, or 0.2%, to $105.77/bbl on the New York Mercantile Exchange. Brent crude on ICE Futures Europe fell 18 cents, or 0.2%. to $108.63/bbl.
China's gross domestic product in the second quarter grew by 7.5% versus last year, a slowdown from the 7.7% registered for the first quarter. The figure, however, was in line with estimates in a survey of economists by Dow Jones Newswires.
A separate report said China's industrial output in June grew at 8.9% from last year, compared with forecasted growth of 9.1%.
The data are the latest evidence that economic growth in China is finally decelerating. Roaring growth in China in recent years has fueled a boom in demand of commodities such as oil, helping to buoy prices even as growth has stalled in the U.S. and Europe.
"The China data was kind of disappointing," said Phil Flynn, analyst at Price Futures Group in Chicago. "That took the momentum down a little bit."
Later this week, markets will shift focus to U.S. Federal Reserve Chairman Ben Bernanke's testimony on the economy before Congress.
Monday's decline comes on the heels of sharp gains last week for Nymex crude, which has rallied on indications that the huge glut of oil trapped in the Midwest is finally making its way to market via rail and pipeline. The Energy Information Administration has reported that U.S. oil inventories are down more than 20 million barrels over the last two weeks.
Brent crude, meanwhile, has gotten a boost as well. Analysts at Goldman Sachs said the European benchmark has climbed almost $8 since June 21 on the back of reduced output among members of the Organization of the Petroleum Exporting Countries and recent unrest in Egypt. The bank said output has likely fallen in Libya, Iraq and Nigeria in recent months.
Dow Jones Newswires reported earlier Monday that OPEC could cut production by half a million barrels a day when it meets in December, the first output cut in five years, as rising U.S. oil output eats into demand for its oil.
"Based on what the forecast says, we would have to cut," one delegate from a Persian Gulf country told Dow Jones.
Front-month August reformulated gasoline blendstock, or RBOB, recently fell 0.67 cent, or 0.2%, to $3.1108/gal. August heating oil rose 0.3 cent, or 0.1%, to $3.0324/gal.
Dow Jones Newswires