Tags: Oil | China | Concern | Stockpiles

Oil Falls to $100 on China Concern, Stockpiles

Tuesday, 11 Mar 2014 05:52 PM

U.S. crude oil prices fell below $100 per barrel for the first time in a month as the potential for more Chinese corporate bond defaults and rising crude supplies in the United States raised concerns about the growth of oil demand.

Oil fell more than $1 Tuesday after copper prices dropped to four-year lows on worries that other firms may follow Shanghai Chaori Solar Energy Science and Technology Co Ltd, which defaulted last week.

U.S. crude fell $1.09 to settle at $100.03 a barrel, its lowest settlement price since Feb. 11. The American benchmark fell further in post-settlement trade, holding near a low of $99.52 per barrel.

Further pressuring the American benchmark, U.S. crude stocks rose 2.6 million barrels last week, the American Petroleum Institute reported. That was more than the 2.2 million barrel build analysts had expected.

Traders will compare the industry group's data with the U.S. Energy Information Administration's official weekly inventory report due on Wednesday.

Brent oil futures rose on geopolitical risk as Western powers moved closer to issuing sanctions against Russia, and Libya's navy opened fire on a tanker after it had loaded oil at a rebel-held port. Brent futures settled 47 cents higher at $108.55 per barrel.

Brent's premium over U.S. crude

Copper and oil markets typically move in tandem, and Tuesday's downward move may signal a larger slide coming in the commodities sector, analysts said.

"Copper is a barometer not just for energy prices but also for the world economy," said Brian LaRose, a technical analyst at United-ICAP. "It is telling a very different story than oil markets lately - that there is a risk of recession and a more sizeable pull back in the commodities sector."

"The energy markets may quickly catch up to copper, exacerbating a move to the downside."

The French foreign minister said sanctions against Russia could come as early as this week, and Poland's prime minister said the European Union would issue sanctions on Monday.

Libya's parliament voted Prime Minister Ali Zeidan out of office after a tanker loaded with oil from a rebel-held port escaped the navy, officials said. The Libyan navy opened fire on the tanker, damaging and therefore stalling the vessel, a Libyan military spokesman said.

Meanwhile, state oil officials said Libya's El Sharara oilfield increased production to around 200,000 barrels a day, up from 150,000 bpd on Monday, but analysts said output remained uncertain in the long term.

Also in the API report, crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.3 million barrels, and gasoline stocks fell by 2.2 million barrels, slightly more than expected as refiners take down plants for scheduled maintenance.

That report follows recent data from China that showed a sharp drop in exports, pointing to weak economic activity.

The U.S. Energy Information Administration (EIA) cut its forecast for 2014 world oil demand growth by 40,000 bpd in its monthly Short Term Energy Outlook on Tuesday. It predicted a 1.22 million barrel year-on-year increase.

© 2017 Thomson/Reuters. All rights reserved.

 
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U.S. crude oil prices fell below $100 per barrel for the first time in a month as the potential for more Chinese corporate bond defaults and rising crude supplies in the United States raised concerns about the growth of oil demand.
Oil,China,Concern,Stockpiles
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2014-52-11
Tuesday, 11 Mar 2014 05:52 PM
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