Oil falls to seven-week low

Oil fell for a second day on Tuesday, slumping to a seven-week low as concerns about a potential slowdown in the economy of No 2 crude consumer China added to worries about global demand. March trade data showed China's import growth fell below expectations, indicating tepid first-quarter demand, although imports of crude oil remained high, at the third highest level on record.
"Cumulative economic concerns are haunting the market again with China's import data, last week's US jobs report and Europe still under pressure," said Tom Bentz, director at BNP Paribas Prime Brokerage Inc in New York. The Chinese data added to overall worries about the global economy, after weak US jobs data late last week dragged oil prices lower on Monday. Oil prices this year have been balancing concerns about demand against supply disruptions - including the potential loss of exports from Opec member Iran.
The US Energy Information Administration also fed market pessimism with a monthly report that cut its forecast for world oil demand growth for 2012 and 2013, while raising the forecast for non-Opec oil output.
Brent crude fell $2.79 to settle at $119.88 a barrel, the weakest close since February 17, having dropped to $119.71 after falling below the 50-day moving average of $121.84. The front-month Brent May contract expires on Friday. US crude dropped $1.44 to settle at $101.02 a barrel, the lowest close since February 14, having pushed below the 100-day moving average of $101.65.
"The entire risk asset market is lower today," said Dominick Chirichella, Senior Partner at Energy Management Institute in New York. "The data out of China is bearish for oil and Europe is looking scary again. If the Iran talks go badly, the fear premium will come back, but I think crude will be the leader in the complex, not gasoline as it has been," Chirichella added.
Investors reacted to news that Iran cut oil exports to Spain and may halt shipments to Germany and Italy ahead of crucial talks with world powers this weekend. Sanctions by the European Union and the United States, aimed at curbing Tehran's nuclear ambitions, have already reduced imports by some European countries, according to industry sources.
Brent crude's premium to its US counterpart narrowed and the spread fell below $19 a barrel. Analysts said the premium could narrow further if the nuclear talks with Iran yielded results. Goldman Sachs on Tuesday forecast the spread could narrow further in the second half of the year as the reversal of the Seaway pipeline alleviated a glut of crude in the Midwest which has depressed the price of US oil futures.
Brent trading volume outpaced turnover for US crude as European traders returned from Easter holiday. US volumes were below the 30-day average. US RBOB gasoline and heating oil futures also fell more than 1 percent. The International Monetary Fund added to concerns about slower growth, telling commodity exporters to brace for lower prices given weak global economic activity.
Oil prices may receive more pressure if weekly inventory reports show US crude stocks rose as expected by analysts surveyed by Reuters. Industry group the American Petroleum Institute is scheduled to release its report at 4:30 pm EDT (2030 GMT) on Tuesday, with the EIA's report following on Wednesday.