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Oil slips to near $93 as China inflation picks up

Source : AP
Last Updated: Fri, Jan 11, 2013 13:30 hrs

$93 a barrel Friday following a rise in China's inflation that if sustained could limit measures to support growth.

By early afternoon in Europe, benchmark oil for February delivery was down 75 cents to $93.07 a barrel in electronic trading on the New York Mercantile Exchange.

The contract rose 72 cents to finish at $93.82 a barrel in New York on Thursday, a gain that traders attributed to a rebound in China's trade growth, which suggests a possible recovery in global demand.

Data released Thursday showed China's export growth in December more than quadrupled from the previous month's level to 14 percent. Imports rose 6 percent, after failing to grow at all in November, in a sign of increasing domestic demand.

It was tempered, however, by data Friday that showed China's inflation spiked to a six-month high in December. Consumer prices rose 2.5 percent over a year earlier, the National Bureau of Statistics said, driven by a 14.8 percent jump in vegetable prices after a severe winter hurt harvests.

Higher inflation could hamper Beijing's ability to support China's recovery.

Reports that Saudi Arabia produced 9 million barrels of crude oil in December, 500,000 barrels less than the previous month, prevented prices from falling further. Official figures will be released next Wednesday in OPEC's monthly oil market report.

"Just a few months ago, Saudi Arabia was producing 10 million barrels of oil per day," said a report from Commerzbank in Frankfurt. "This sharp reduction in supply from the largest OPEC producer should help offset the increased oil supply in the U.S. and diminish the supply overhang. Coupled with brighter demand prospects, this points to further increases in the oil price."

Other analysts, however, said that the output cut was likely due to lower Saudi expectations of global demand for crude, making the move bearish for oil prices.

Brent crude, used to price international varieties of oil, was down $1.36 to $110.53 per barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline fell 4.22 cents to $2.7511 a gallon.

— Heating oil was down 2.92 cents to $3.0251 a gallon.

— Natural gas rose 6.1 cents to $3.254 per 1,000 cubic feet.

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Pamela Sampson in Bangkok contributed to this report.




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