• Monday, May 27, 2024
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BusinessDay

Oil falls below $103 on weak China demand

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Crude prices fell below $103 a barrel on Monday weighed down by a drop to an eight-month low in oil demand in China, the world’s second-largest consumer. Reuters report showed that Brent crude slipped $1.27 to $102.64 barrel by 1405 GMT. U.S. oil fell $1.19 to $94.85 a barrel.

An unexpected rise in U.S. retail sales in April which pointed to underlying strength in the economy failed to change the market direction. China’s refinery crude throughput fell 3 percent in April from March, its lowest daily rate since last September, as refineries entered maintenance season. Implied oil demand was up 3.2 percent in April from a year earlier to about 9.6 million barrels per day (bpd), the lowest in eight months.

“The economic data in China is not yet providing upward support. It is not that it is weak, it is simply not sufficient to support a bullish trend,” Harry Tchilingurian, head of commodity market strategy at BNP Paribas, said.

The dollar’s recent strengthening, which makes oil more expensive for holders of other currencies, also kept a lid on prices. “The value of the dollar has weighed on the prices of all commodities, specially the more sensitive ones such as oil and gold,” Tchilingurian said.

News that militants blew up the Iraq-Turkey pipeline on early Monday, stopping the flow of oil, the second attack in a week, offered some support. The market remained bearish on the supply side, too.