Oil prices fell on Wednesday as traders reacted to a growth downgrade for China, the world’s biggest consumer of energy.
Brent North Sea crude for delivery in July shed eight cents to stand at $104.15 a barrel in London midday deals.
New York’s main contract, light sweet crude for July, dropped 66 cents to $94.35 a barrel.
“Prices have pulled back a little. We are seeing some profit-taking after the gains lately,” Jason Hughes, head of sales trading at CMC Markets in Singapore, told AFP.
“Dealers are taking some risks off the table ahead of US inventory data” due on Thursday.
The US Department of Energy releases US crude oil inventory figures for the week ended May 24 a day later than usual owing to a public holiday in the United States last Monday.
Although stockpiles fell by 300,000 barrels in the week ended May 17, inventories remain high, indicating weak demand in the world’s biggest crude consumer that continues to weigh on prices.
Adding to the pressure on demand was news on Wednesday from the International Monetary Fund that it has cut its 2013 growth forecast for China to in the region of 7.75 percent, citing a sluggish global recovery which has hurt exports.
The organisation had previously predicted growth of 8.0 percent in the world’s second-biggest economy this year.
“The Chinese economy is expected to grow at around 7.75 percent this year and at about the same pace next year,” David Lipton, IMF first deputy managing director, told reporters in Beijing.
Added to the mix, the OECD on Wednesday said growth in China and other major emerging economies should be robust and outperform developed countries, although it trimmed its forecasts for this year and next.
Global oil prices had rallied on Tuesday, supported by data showing an encouraging surge in US consumer confidence and home prices as markets reopened after a long holiday weekend.
US consumer confidence — a barometer of the health of the world’s biggest economy — hit a five-year peak in May and home prices surged 11 percent year-on-year in March, the biggest annual increase in nearly seven years.
Source: AFP
