* S. Arabia’s Naimi says happy with current oil market
* China Oct oil demand up 6.5 pct on yr to near record
* Coming Up: Germany wholesale price index; 0700 GMT
By Manash Goswami
SINGAPORE, Nov 12 (Reuters) – Brent oil slipped below $109 a barrel on Monday due to demand growth concerns as President Barack Obama struggles to reach a deal to avert a looming U.S. fiscal calamity, overshadowing upbeat data from key consumer China.
Worries about the United States tipping into recession due to the “fiscal cliff” of about $600 billion in expiring tax cuts and spending reductions – scheduled to take effect in January – weighed across financial markets, pushing Japan’s Nikkei average to a four-week low and limiting movement in other Asian equities.
Obama said he was prepared to compromise with Republicans to avert the looming calamity, but insisted a tax increase for the rich must be part of any bargain.
“Traders will be on the sidelines till the time there is clarity on the core risk issues concerning the global economy,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Front-month Brent crude slipped 45 cents to $108.95 a barrel by 0207 GMT, snapping two straight days of gains.
U.S. oil was down 17 cents at $85.90, after ending up more than 1 percent last week following a three-week slide.
Oil prices were also pressured by data showing Japan’s economy shrank 0.9 percent in July-September from the previous quarter. It was the first contraction in three quarters, suggesting faltering global demand and weak consumer spending may push the economy into a mild recession.
Brent is expected to revisit its Nov. 8 low of $106.12 per barrel as it seems to be consolidating within a triangle, according to Reuters technical analyst Wang Tao.
SUPPORTING PRICES
But losses in oil were checked by data over the weekend showing China’s implied oil demand in October surged.
Implied oil demand in China, the world’s second-largest fuel user, grew 6.5 percent in October from a year earlier, close to September’s record high as demand was underpinned by fuel inventory building and new production capacity.
“It was encouraging to see an improvement, though it was not really a game changer,” Spooner said, referring to the China data.
China used roughly 9.71 million barrels per day (bpd) of oil last month, close to September’s record high of 9.79 million bpd, according to Reuters calculations based on refinery output and net imports of refined fuels.
The global oil market is in good shape and Saudi Arabia is happy with the current oil price, Saudi Oil Minister Ali al-Naimi said, expressing satisfaction over a Gulf Arab effort which kept prices in check.
OPEC heavyweight Saudi Arabia and its Gulf Arab allies have kept output high all year to keep prices under control and the extra oil has helped reverse a spike in prices that took Brent crude to $128 a barrel in March.
“The market really is in good shape. We are very happy with the situation in the market,” Naimi told reporters on the sidelines of an oil and gas exhibition in Abu Dhabi. (Editing by Himani Sarkar)
Source: Reuters
