Oil prices ease on China growth fears

March 13, 2012 | 08:45

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World oil prices dropped on Monday as investors fretted over the strength of worldwide energy demand following weak Chinese economic data.

An employee of the Kuwait Oil Company looks at the Gathering Center No.15 of al-Rawdatain field, 100 kms north of Kuwait City. World oil prices dropped on as investors fretted over the strength of worldwide energy demand following weak Chinese economic data.

New York's main contract, West Texas Intermediate crude for delivery in April, shed $1.06 to close at $106.34 a barrel.

Brent North Sea crude for April settled at $125.34 a barrel in London trade, down 64 cents from Friday's closing level.

"Crude oil fell sharply... Traders were reacting to news over the weekend that China had recorded its largest trade deficit in more than ten years," said GFT analyst David Morrison.

"This added to concerns over the outlook for global growth as austerity measures across Europe take hold."

Customs data released Saturday showed the Chinese economy swung to a trade deficit of $31.48 billion in February, as crude oil and other key raw material imports soared.

"This suggests that China is acting strategically to boost its energy holdings, no doubt mindful of growing geopolitical risks, and anxious to ensure that it will be able to keep abreast of future domestic demand," Morrison said.

Oil traders meanwhile also booked profits from recent price rallies.

"It seems that investors remain cautious about the level of the oil demand, said Sucden oil analyst Myrto Sokou.

"Investors were prompted to some profit taking today, following the strong upside rally in crude oil prices last week."

AFP

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