Crude declines a second day as China industrial output weakens
Crude declines a second day as China industrial output weakens
BEN SHARPLES
BEIJING, China (Bloomberg) -- West Texas Intermediate and Brent crude declined for a second day as China’s industrial output expanded at the weakest pace since the global financial crisis.
Futures slid as much as 1.8% in New York as Brent in London was poised for the lowest close in more than two years. Factory production in China, the world’s second-biggest oil consumer, rose 6.9% from a year earlier in August, the National Bureau of Statistics said Sept. 13, compared with 9% in July and a median estimate of 8.8% in a Bloomberg News survey. Crude output in Libya increased to 870,000 bpd, according to state-run National Oil Corp.
“The major news is the data out of China,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “It means potentially another area of moderation in overall oil demand. We’re in a situation where the demand, supply scenario is fairly weak, and the market is stripping out a lot of the geopolitical risk premium.”
WTI for October delivery dropped as much as $1.64 to $90.63/bbl in electronic trading on the New York Mercantile Exchange and was at $91.17 at 12:57 p.m. in Sydney. Front-month futures are set for the lowest close since May 2013. The volume of all futures traded was about 282% above the 100-day average. Prices slid 1.1% last week and have decreased 7.4% this year.
Brent for October settlement, which expires Sept. 15, fell as much as 90 cents to $96.21/bbl on the London-based ICE Futures Europe exchange. The more active November contract slid 60 cents to $97.36. Front-month futures are poised for the lowest close since June 28, 2012. The European benchmark crude was at a premium of $5.94 to WTI.
Industrial Production
Factory output in China was the slowest single-month pace outside of the Lunar New Year holiday period of January and February since December 2008, based on previously reported figures compiled by Bloomberg.
China will account for about 11% of global oil demand this year, compared with 21% for the U.S., according to the International Energy Agency.
The IEA cut world oil demand forecasts for this year and 2015 after a slowdown in the second quarter that prompted Saudi Arabia to pare exports to a three-year low. Global consumption will gain by 1.2 MMbpd, or 1.3%, to 93.8 MMbpd next year, the Paris-based IEA said in a report on Sept. 11. The expansion is 165,000 bpd less than it predicted a month ago.
Oil prices are poised to decrease next year as U.S. crude production reaches a 45-year high, the Energy Information Administration said Sept. 9.
The conflict in Iraq, the second-biggest member of the Organization of Petroleum Exporting Countries, has spared oil facilities in the south, home to about three-quarters of its crude output. U.S. allies signaled readiness to step up the fight against Islamic State under a coalition formed by President Barack Obama as the beheading of a British aid worker sparked further outrage.
