Oil falls below $107 on weak growth in China trade
Date : Monday 12 March 2012 15:20
Oil prices fell below $107 a barrel Monday in Asia as a slowdown in China's trade suggested demand for crude could weaken.
Benchmark oil for April delivery was down 57 cents to $106.83 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 82 cents to settle at $107.40 per barrel in New York on Friday. Brent crude was down 60 cents at $125.38 per barrel in London AP reported.
China on Saturday reported its biggest monthly trade deficit in at least a decade in February as imports rebounded after a Lunar New Year holiday slowdown in January. But the combined figures for both months showed growth in imports and exports decelerating markedly.
January-February export growth slowed to 6.9 percent over the same two-month period last year, barely half of December's 13.4 percent rate. Imports for the two months rose 7.7 percent, down from December's 11.8 percent. China is a major importer of oil and other fuels.
Crude has jumped from $75 in October as signs of an improving U.S. economy have bolstered investor confidence. The government reported Friday that the U.S. economy added a better than expected 227,000 jobs last month and the unemployment rate remained steady at 8.3 percent.
"There are strong indications that global GDP growth is stronger than commonly imagined," J.P. Morgan said in a report. "If this trend were to continue throughout 2012, oil demand growth and corresponding price pressures could be higher than currently projected."
J.P. Morgan expects crude to average $111 this year and $122 in 2013.
Some analysts worry that higher oil prices will eventually undermine economic growth and demand for Asian goods in the U.S. and Europe. Higher fuel costs also threaten to re-ignite inflation in Asia.
"Across the region, food prices tend to rise with a lag in response to oil, and food matters hugely for regional inflation," said Frederic Neumann, economist with HSBC in Hong Kong. "We need crude to come down."
Crude has traded near 10-month highs in recent weeks amid growing tensions over Iran nuclear program. Analysts forecast that a pre-emptive military strike by the U.S. or Israel on Iran's nuclear facilities would likely lead to global crude supply disruptions and a jump in oil prices.
"A sharp spike would play such havoc with demand in advanced markets ... that even Asian growth would come off its rails," Neumann said.
In other energy trading, heating oil fell 0.3 cent to $3.26 per gallon and gasoline futures fell 0.6 cent to $3.33 per gallon. Natural gas slid 5 cents to $2.27 per 1,000 cubic feet.
Story Code: 37848
Source : Afghan Voice Agency (AVA), Kabul