Oil Dips after Weak Chinese Trade Data

Brent crude oil prices slipped on Monday as a slump in Chinese imports pointed to lower fuel demand in the world’s biggest energy consumer, outweighing news of falling U.S. oil rig counts and healthy U.S. economic growth.

Global benchmark Brent crude oil for March was down 10 cents at $57.70 a barrel by 0748 GMT (2.48 a.m. EST) after rising as high as $59.06 earlier in the session. U.S. crude was at $51.87 a barrel, having hit a session high of $53.40.

Prices dipped as China’s trade performance slumped in January, with exports falling 3.3 percent from year-ago levels while imports tumbled 19.9 percent, far worse than analysts had expected and highlighting a deepening slowdown.

Preliminary January customs data came in at 27.22 million tonnes of crude imports, though estimates from Thomson Reuters Research and Forecasts put the final figure at around 30 million tonnes.

Although Chinese overall import figures remain high, analysts said there were signs that it was slowing, weighing on prices.

“Opportunistic buying waned in January as a combination of weak demand, high inventories and tight credit conditions impacted import demand,” ANZ bank said on Monday.

“When China stops filling up its SPR, it would definitely put a bearish note to prices,” said Daniel Ang of Singapore-based Phillip Futures.

Andrew Polk, economist at the Conference Board in Beijing, said he was concerned by the implications of the startlingly negative import figure.

“Import data suggest a substantial slowdown in the industrial sector. The first quarter looks to be pretty horrible,” Polk said.

Brent rose more than 9 percent last week, its biggest weekly rise since February 2011. The North Sea oil futures contract has climbed more than 18 percent in the past two weeks, its strongest showing since 1998. The move ended a six-month slide that saw oil prices lose more than half their value.

Reuters technical analyst Wang Tao said crude charts suggested the run-up in prices may have ended for a while.

“I prefer a bearish bias,” Wang Tao told Reuters Global Oil Forum. “Both WTI and Brent may correct in this week before seeking their next direction.”

The number of U.S. oil rigs fell to its lowest level since December 2011 last week, indicating the pressure that tumbling prices have put on oil producers.

Stronger-than-expected growth in U.S. jobs in January also helped support oil, as non-farm payrolls increased 257,000, outstripping Wall Street forecasts.

Source: Reuters