Monday 18 June 2018

Oil eases below $123 after Q1 rally

London, April 2, 2012

Oil slipped below $123 a barrel on Monday, following a 14 per cent rise in the first quarter, as economic contraction in Europe outweighed a brighter outlook in China and global supply concerns.

The euro zone's manufacturing sector shrank for an eighth month in March, according to Markit's Eurozone Manufacturing Purchasing Managers' Index. In contrast, China's official Purchasing Managers' Index hit an 11-month high in March.

Brent crude slipped 44 cents to $122.44 a barrel by 1040 GMT. It ended the first quarter up 14.3 per cent, its biggest quarterly rise since the first quarter of 2011.

US crude fell by 53 cents to $102.49.

"We had some slightly positive Chinese data. The market is drifting in this broad sideways range, but Iran will keep it above $120," said Christopher Bellew, a broker at Jefferies Bache in London.

Brent has fallen from its 2012 high of $128.40 reached on March 1, and analysts said there were signs of waning investor  enthusiasm. The U.S. Commodity Futures Trading Commission said on Friday speculators trimmed net long U.S. crude and options positions in the week to March 27.

"Financial investors, who were one of the driving factors behind the rise in oil prices in the first two months of this year, would appear to (be) becoming more sceptical," said analysts at Commerzbank in a report.

Following the Chinese PMI figures, investors will be keeping an eye on US manufacturing data - the ISM index - for signs of economic health in the world's biggest oil user.

Oil was supported by the prospect of supply disruptions.

US President Barack Obama said on Friday there was enough oil in the market to allow countries to cut imports from Iran, OPEC's second-largest producer.

In his decision, Obama said increased production by some countries as well as "the existence of strategic reserves" helped him come to the conclusion that sanctions can advance.

Iran and six world powers will meet in Turkey on April 13-14 for a round of talks over Tehran's disputed nuclear programme, US Secretary of State Hillary Clinton said on Saturday.

While threats to Iranian supply are the main worry for oil markets, actual supply has been cut in Syria, Yemen and South Sudan. On Sunday, Sudan and South Sudan accused each other of launching attacks in the oil-producing area straddling their border.

Top global exporter Saudi Arabia is pumping almost 10 million barrels per day, the highest in decades, and insists there is no shortage of supply. Opec production overall is at the highest since 2008, according to a Reuters survey. – Reuters

Tags: Oil | London | Obama | US crude | First quarter |


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