Oil slips towards $103 on tepid growth outlook
London, April 29, 2013
Brent crude oil slipped towards $103 per barrel on Monday as a shaky outlook for growth in the world's biggest oil consumers, the US, Europe and China, encouraged commodities markets to consolidate.
Oil rallied from nine-month lows last week on expectations that stronger global economic activity would encourage more fuel consumption, but disappointing data has capped the recovery.
The U.S. Commerce Department reported on Friday the world's largest economy grew at an annual rate of 2.5 percent in the first-quarter, below expectations of 3 percent.
Confidence in the euro zone's economy fell further in April, European Commission figures showed on Monday, with morale in the 17-country bloc down 1.5 percentage points to 88.6, worse than forecast by economists.
"Disappointing GDP data for the United States has raised concerns about the level of oil demand and led to some profit-taking after recent big gains," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
Brent lost 10 cents to $103.06 per barrel by 1100 GMT, after last week racking up its biggest one-week gain since November 2012.
Brent is more than 6 percent below its starting point in April, pressured by data suggesting the global economy remains on a fragile footing at best.
U.S. crude was up 40 cents at $93.40 a barrel, after sliding to below $86 mid-month from almost $98 at the beginning of April.
"First-quarter (U.S.) GDP really disappointed, and as long as unemployment stays high, the U.S. Federal Reserve is going to have to keep its backstop on the economy with quantitative easing," said Ben Taylor, sales trader at CMC Markets.
Traders will focus on China this week, with the world's second largest oil consumer's manufacturing data for April expected to edge up from March, a Reuters poll found.
A private sector survey of purchasing managers sponsored by HSBC last week showed activity in China's industrial sector dipped in April as new export orders shrank, spooking investors.
"There has been some concern that with an unstable Europe being one of China's biggest export markets, this could have a negative impact on the PMI number," Taylor said.
"Europe is in a really bad place at the moment, you get the sense that everyone has really given up on it and is focusing on other places to drive global growth."
The Federal Reserve is expected to keep buying $85 billion worth of bonds per month when it meets this week, with the decision announced at 1815 GMT on Wednesday.
The European Central Bank will likely cut interest rates when it meets on Thursday, a Reuters poll showed, but the step is seen doing little to pull the euro zone out of a recession. – Reuters