Oil falls to $112, supply concerns ease

Thu Oct 18, 2012 10:06am EDT
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By Alex Lawler

LONDON (Reuters) - Oil dropped to $112 a barrel on Thursday, pressured by signs of a healthier supply outlook and a rise in U.S. jobless claims, offsetting Chinese data signaling stabilization in the economy of the world's second-largest oil consumer.

U.S. crude inventories rose more than expected last week, a report showed on Wednesday. <EIA/S> This weekend Britain's largest oilfield, Buzzard, is scheduled to restart, increasing supply of crude underpinning the Brent contract.

Brent crude for December delivery was down $1.22 at $112.00 a barrel by 1352 GMT, after settling 78 cents lower. U.S. oil for November fell $1.08 to $91.04.

"Brent is currently under pressure," said Carsten Fritsch, analyst at Commerzbank in Frankfurt. "The fact that North Sea supply is due to rebound with the restart of the Buzzard field may also be a factor for the weaker tone of the Brent price."

In a further addition to supplies, Sudan issued a tender to sell Dar Blend crude in November after parliaments in Khartoum and South Sudan ratified an agreement this week to end hostilities and restart southern oil exports.

The market made a further downward lurch after the U.S. jobs report. Initial claims for state unemployment benefits rose 46,000 to a seasonally adjusted 388,000, the Labor Department said on Thursday.

Oil had edged higher earlier in the session. China's economy grew 7.4 percent in the third quarter from a year ago, in line with forecasts, while industrial production, retail sales and investment data were all slightly ahead of expectations.

Still, China's growth rate fell short of the official 7.5 percent target and an expansion of 7.4 percent still represents a sharp slowdown for the country, where the economy grew 9.2 percent in 2011.   Continued...

A man fills his truck up with gas at a gas station in Santa Monica, California, May 28, 2008. REUTERS/Lucy Nicholson