October 15, 2012 / 2:02 PM / 6 years ago

Brent falls towards $114 on weak demand outlook

LONDON (Reuters) - Brent futures fell towards $114 a barrel on Monday as worries over weak global oil demand tempered positive Chinese and U.S. data.

A worker holds up a fuel pump nozzle after filling up the tank of a car at a petrol station in Cairo October 3, 2012. REUTERS/Mohamed Abd El Ghany

Data over the weekend showed China’s September exports grew at roughly twice the rate expected, while imports also increased, possibly indicating that measures to spur growth in the world’s second largest economy are working.

But exports to the European Union - the single biggest overseas market for Chinese goods - fell for a fourth month and crude demand in China remained relatively weak, underlining a worsening outlook for global fuel consumption.

Prices were also hurt as the International Energy Agency (IEA) last week cut its demand growth forecast for next year.

Brent crude was down 7 cents to $114.55 a barrel by 1330 GMT, after sliding 75 cents in the previous session. U.S. oil was down $1.25 at $91.61.

U.S. retail sales rose in September as Americans bought more of everything from cars to gasoline and electronics, pointing to stronger-than-expected economic growth in the third quarter.

Customs data showed exports from China in September grew 9.9 percent from a year earlier, roughly twice the 5.0 percent rate expected by investors and up sharply from the 2.7 percent annual rise recorded in August.

At 4.89 million barrels, China’s crude oil imports were 12.8 percent higher on a daily basis than the 22-month low of 4.33 million bpd in August, data over the weekend showed.

“The Chinese economic data beat analysts’ expectations and provided some upside momentum to the market,” Myrto Sokou at Sucden Financial said in a note.


But exports to the EU fell 10.7 percent year on year in September, the fourth straight month of decline, the third double-digit drop in a row and the seventh month of contraction so far this year. Exports to the EU this time a year ago were up 9.8 percent.

Crude oil demand in the world’s second largest oil consumer remained relatively weak, as refineries in China continued to undergo maintenance.

“While refinery maintenance in fact increased last month to a four-month high of some 670,000 b/d, the uptick in imports can therefore to a great extent be seen as an upwards correction from the 22-month lows in August,” JBC Energy said in a note.

China has set its 2013 non-state crude oil import quota at 29.1 million tonnes, the same as this year, the Ministry of Commerce said on Monday.

“China’s crude oil demand is not as dynamic as it was a few months ago,” said Carsten Fritsch, oil analyst at Commerzbank.

“We shouldn’t forget that August was an extremely weak month and the imports we saw in September for crude were still significantly beneath what we saw in the first half of the year,” he said.

Both OPEC and the U.S. Energy Information Administration cut 2013 forecasts for growth in world oil demand this month, while the IEA said ample supply from North America and Iraq, coupled with declining global demand, could help prices ease over the next five years.

The IEA cut its demand growth projection for 2011-2016 by 500,000 barrels per day (bpd) from its previous report and cut its 2013 demand outlook by 100,000 bpd, citing lower consumption in Europe, the Americas and China.

Additional reporting by Manash Goswami and Manolo Serapio Jr.; editing by Keiron Henderson and Jason Neely

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