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