The hot summer months do take their tollJuly 5, 2015 12:00
Oil down on IEA global growth view, awaits China data
U.S. new jobless claims fall to 4-year low; China Q2 GDP due Friday, lower growth forecast; U.S. Fed to act on stimulus if economy worsens
July 13, 2012 8:38 by Reuters
Crude oil futures fell on Thursday as investors worried about the global economy a day before China, the world’s second largest oil consumer, releases second-quarter growth data that forecasters expect will be the weakest since 2008.
Losses were trimmed after a report that new weekly jobless claims in the United States fell to the lowest level in four years, sparking some hopes for the struggling U.S. labor market.
Oil futures remained weak as investors avoided riskier assets, with the euro falling to a two-year low against the dollar on global economic growth worries.
A stronger dollar makes commodities priced in the greenback, such as oil, more expensive for holders of other currencies.
“Oil markets today are on a macro trading mode and predominately driven by movements in the euro and the dollar. Oil fundamentals do create an impact, such as when North Sea loading volumes are down, but the effects are fleeting,” said Dominick Chirichella, senior partner at Energy Management Institute in New York.
Oil came under pressure early after the International Energy Agency, adviser to 28 industrialized nations, said a global economic slowdown could put a lid on oil prices although there was a risk that “nasty supply surprises” could reignite a market rally.
The agency said market fundamentals had “clearly eased since the start of the year” and oil stocks had built up significantly over the last few months.
China’s economic growth probably slowed further in the second quarter to 7.6 percent, its weakest since the 2008 financial crisis as investment, factory output and retail sales weakened across the board, a Reuters poll showed.
In London, Brent crude for August delivery was down 40 cents at $99.83 a barrel by 12:50 p.m. EDT (1650 GMT) after dropping to an early low of $98.51.
U.S. August crude was down 70 cents at $85.11, after falling to a session low of $84.21.
Initial U.S. claims for state unemployment benefits dropped 26,000 to a seasonally adjusted 350,000, the U.S. Labor Department said.
“While the jobless claims and import price drops are supportive, they should also advance the dollar versus the euro, so it will be a difficult read on how it will affect the crude market,” said John Kilduff, partner at Again Capital LLC in New York.
He was referring to another set of government data showing that June import prices fell 2.7 percent, putting U.S. inflation pressures on ice for now, potentially freeing up some money from households.
Israel’s Vice Minister, Moshe Yaalon, said on Thursday the United States must do more to show Iran it is serious about curtailing its nuclear ambitions because the current pressure was not working.
It was the latest sign of tensions in the Middle East spawned by Iran’s disputed nuclear program that has provoked the European to impose a ban on Iranian oil imports that began at the start of the month.
The U.S. has also imposed sanctions that aim to hamper Iran’s ability to trade oil with its usual customers.
But traders said on Thursday that, despite the EU ban, Iran had issued official selling prices for loading its crude oil in August.
STIMULUS HOPES LOWERED
Oil futures rallied more than 2 percent on Wednesday, carried by momentum trading, despite disappointment that the U.S. Federal Reserve, though keeping its options open for policy easing, said it would act only if the economy worsened.
Also on Wednesday, EIA data showed that U.S. crude inventories fell 4.7 million barrels last week, but the impact was limited as much of the drawdown was in the West Coast, which is not geographically linked to the rest of the U.S. petroleum regions. Furthermore, U.S. gasoline and distillate stocks rose much more than expected.
(Additional reporting by Robert Gibbons in New York, Jessica Donati and Ikuko Kurahone in London, Florence Tan and Manash Goswami in Singapore; Editing by David Gregorio)