Oil sinks $3 on China slowdown concern, Fed plan

LONDON Thu Jun 20, 2013 8:02pm IST

Tanker trucks form a queue as they wait to unload crude oil at Jordan Petroleum Refinery in the city of Zarqa, 25 km (15 miles) northeast of Amman April 2, 2013. REUTERS/Muhammad Hamed/Files

Tanker trucks form a queue as they wait to unload crude oil at Jordan Petroleum Refinery in the city of Zarqa, 25 km (15 miles) northeast of Amman April 2, 2013.

Credit: Reuters/Muhammad Hamed/Files

Related Topics

LONDON (Reuters) - Oil fell $3 a barrel on Thursday to a one-week low near $103, pressured by a survey pointing to a slowing Chinese economy and by the U.S. Federal Reserve's plan to roll back its stimulus programme.

Commodities and equities fell after the survey of Chinese manufacturing activity in June heightened the risk of a sharper slowdown this quarter in the world's second-largest oil consumer.

Brent crude was down $3.00 to $103.12 a barrel by 1357 GMT, while U.S. oil declined $2.44 to $95.80. Brent traded as low as $103.05, the lowest intra-day price since June 13.

"Oil prices have inevitably failed to escape the present climate and have come under strong pressure," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

"Supply-side risks, which have pushed oil prices up over the past few days, should keep losses within limits."

Oil was already under pressure after Fed Chairman Ben Bernanke said on Wednesday the U.S. economy was expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.

Prices also took a hit from a surprise increase in U.S. crude inventories, even in the midst of the summer driving season when demand for gasoline rises. Stocks rose by over 300,000 barrels, in contrast to the 500,000 barrel drop analysts forecast. <EIA/S>

On the technical charts, Brent has fallen below support at $104 and also tested the next level at the 20-day moving average at $103.68. The next suppprt line is the 50-day moving average at $102.96.

Oil may not fall much further from current levels due to concerns about a disruption in supplies from the Middle East, home to about a third of the world's output.

Investors have been worried that fighting in Syria could spread within the region. The United States has said it plans to send U.S. weapons to Syrian rebels following proof the Syrian government had used chemical weapons against opposition forces.

"The long-running conflict in Syria has little fundamental market impact, but fears of a spillover into neighbouring oil producers are likely to see jittery Brent trading this summer," said Andrey Kryuchenkov, an analyst at VTB Capital in London.

(Reporting Alex Lawler and Manash Goswami; Editing by Jane Baird)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Diplomacy

REUTERS SHOWCASE

Maruti Results

Maruti Results

Maruti Suzuki says profits helped by sentiment, not growth.  Full Article 

Tracking the Monsoon

Tracking the Monsoon

Monsoon turns patchy after revival.  Full Article 

ICICI Profit Up

ICICI Profit Up

ICICI Bank Q1 net profit up 17 percent, beats estimates.  Full Article 

Pharma Sector

Pharma Sector

FDA raises concern over drug production process at Cadila  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Fuel Prices

Fuel Prices

IOC to cut petrol prices by 1.5 pct from Friday  Read 

Economic Pulse

Economic Pulse

India's infrastructure output growth hits 9-month high in June  Full Article | Related Story 

Joint Bid

Joint Bid

ONGC, Oil India bid $1.5 bln for stake in Murphy Oil's Malaysia assets - sources  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage