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Apr 13, 2012, 12.36 PM IST
Brent crude futures slipped towards $121 on Friday as demand growth worries resurfaced after China's economic expansion lagged expectations, while caution ahead of talks between Iran and world powers and North Korea's missile launch capped losses.
The world's second-largest economy grew at its weakest pace in nearly three years in the first quarter, with the annual rate of expansion easing to 8.1 percent. This weighed on prices as the market had positioned for the growth numbers to top forecasts.
Front-month Brent crude, which is expiring later in the day, slipped 60 cents to $121.11 per barrel by 0438 GMT, after settling $1.53 higher. The contract is poised to post a fourth straight weekly decline, sliding about 1 percent this week.
U.S. oil slipped 52 cents to $103.12 a barrel after settling 94 cents higher at $103.64. For the week, the benchmark is expected to remain unchanged for the second time in a row.
"We do expect prices to come off a bit because the market had expected China's growth to top forecasts," said Ben Le Brun, market analyst at OptionsXpress. "But even at this level, it is higher than what the government expects growth to be. I don't see it as a major cause of worry."
China's fifth successive quarter of slowing annual growth in the first three months of 2012 left the economy on track for its weakest full year of expansion in a decade.
The GDP number matched the 8.1 percent posted in the second quarter of 2009, when policymakers in the world's second-biggest economy were rolling out 4 trillion yuan in stimulus measures to counter the financial crisis that had driven global trade to a virtual halt.
Global demand for China's exports may remain sluggish into mid-year, with much of the euro zone seen in recession and weak jobs data last week reviving concerns over the strength of U.S. economic recovery.
SAUDI TO BRING DOWN HIGH PRICES
Top oil exporter Saudi Arabia reiterated on Friday that it was determined to bring down high oil prices and was working with fellow OPEC members towards that goal.
"We are seeing a prolonged period of high oil prices," Oil Minister Ali al-Naimi said in a statement during a visit to Seoul. "We are not happy about it. (The Kingdom of Saudi Arabia) is determined to see a lower price and is working towards that goal."
Higher output from Saudi Arabia and weaker demand growth have broken a two-year cycle of tightening supply conditions in the oil market, the International Energy Agency said in its monthly report on Thursday.
Brent will edge up to a resistance at $122.62 per barrel before starting a correction, while U.S. oil is expected to end the rebound from the April 10 low of $100.68 around resistance at $104.45 per barrel and then start a correction, according to Reuters technical analyst Wang Tao.
(Editing by Clarence Fernandez)
May 25 2013, 16:36
- in Technicals
May 25 2013, 16:36
- in MARKET OUTLOOK