Oil futures slid nearly 3% in electronic trade Monday, with weaker-than-anticipated economic reports from China adding to festering worries about slowing growth in global demand for the commodity.
May crude oil fell $2.47, or 2.7%, to $88.83 a barrel in Asian trading after China posted quarterly-growth and monthly industrial-production figures that fell short of expectations.
China said gross domestic product rose 7.7% in the January-March quarter, slower than growth of 7.9% in the fourth quarter, and below expectations for an 8% gain in separate surveys from Dow Jones Newswires and Reuters.
The report of slower activity for the major energy consumer came after the International Energy Agency last week modestly cut its forecast for growth in oil demand, and the Organization of the Exporting Countries slightly reduced its own global oil-demand estimates for the year slightly. Oil futures fell by 1.5% last week.
Among the data from China on Monday, industrial production increased 8.9% from the year-earlier period, missing the Dow Jones Newswires forecast for a 10% gain. The growth was the weakest in more than a year, slowing from a 9.9% average rise for the January-February period.
“Indeed, 2013 is starting to look eerily like 2012: Last year, a ramp-up in economic activity through the first few months proved short-lived, precipitating a mid-year slump and an aggressive policy response. Unfortunately, the cost of repeating this strategy looks to be prohibitively high,” economists at IHS told clients Monday.
“Another year of propped-up growth via state spending and a credit deluge would, we fear, push China dangerously close to proving [former premier] Wen Jiabao correct — that the current economic model is ‘unsustainable.’ If something is unsustainable, at some point, it won’t be sustained,” IHS economists Xianfang Ren and Alistair Thorton wrote.
On Friday, oil dropped $2.22, or 2.4%, to $91.29 a barrel on the New York Mercantile Exchange, the lowest close for a most-active futures contract since March 6, according to FactSet data. The decline came after soft U.S. retail-sales and consumer-sentiment reports.
London-traded May Brent crude also suffered on Monday, falling $2.11, or 2.1%, to $101 a barrel.
Among other energy products, May gasoline futures shed 5 cents, or 1.8%, to $2.75 a gallon. Gasoline futures last week fell 2.2%.
May heating oil declined 3 cents, or 1.2%, to $2.84 a gallon, extending last week’s loss of 1.3%.
May natural-gas futures , however, rose 3 cents, or 0.5%, to $4.24 per million British thermal units. Prices last week rose 2.4%, aided by news that U.S. supplies of natural gas in storage remained at their lowest level in roughly two years.
Marketwatch
