Brent drops below $102 on weak Chinese factory data
China's manufacturing activity slowed in June, with a private survey by HSBC hitting the lowest in nine months, while the bank's economist said the third quarter will be challenging on tighter credit.
July 01, 2013 / 12:39 IST
Brent crude slipped below USD 102 a barrel on Monday as weak data from China reinforced concerns of slower growth in the world's second-largest economy, dampening the outlook for oil demand.
China's manufacturing activity slowed in June, with a private survey by HSBC hitting the lowest in nine months, while the bank's economist said the third quarter will be challenging on tighter credit.Also Read: See gold below Rs 24000 by December: Motilal Oswal"We're likely to see China growing slower going forward and that is going to be reflected in slower oil demand growth," said Lee Chen Hoay, an analyst at Phillips Futures.Brent crude dropped to as low as USD 101.63 a barrel after the Chinese data. The August contract was down 21 cents at USD 101.95 a barrel by 0423 GMT.Front-month Brent shed more than 7 percent in the second quarter ended June, its third straight quarterly decline and the longest such stretch of losses in 15 years.US crude fell 16 cents to USD 96.40 a barrel.A stronger dollar also weighed on oil as investors bought the currency on expectations that the Federal Reserve will start rolling back its bond-buying programme. Improvement in Friday's US employment data could support the Fed's case to end its stimulus programme.A firmer US currency makes dollar-denominated commodities such as Brent more expensive for holders of other currencies.Hedge funds and other large speculators slashed their bets on rising US crude oil prices in the seven days to June 25, regulatory data showed on Friday.The spread between US crude and Brent held at its narrowest since January 2011, as improved logistics allowed excess oil to flow out of the delivery point for WTI at Cushing, Oklahoma.Canadian crude supply has also been disrupted by significant flooding in Alberta and likely increased demand for US crude, Barclays analysts said in a note.Oil supply from OPEC and the United Kingdom fell in June on lower output from Britain's Buzzard field and as a Reuters survey showed that OPEC pumped less crude due to disruptions in Libya and Nigeria.Mexican crude production hit its lowest in nearly two years in May, while exports were their weakest in more than two decades, official data showed.In the Middle East, investors are closely watching whether Iran's president-elect Hassan Rouhani can improve the country's antagonistic relations with the West.The United States has maintained its tough stance on Iran, with its top US energy official saying on Sunday that he believed the oil market could cope with any further reduction of Iranian oil exports from the tightening of sanctions on Tehran over its disputed nuclear programme. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
