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Markets

Oil slips below $110 on weak Chinese data

Published Updated

oil-fieldLONDON: Oil fell below $110 on Monday after data from China revived worries over the economic recovery in the world's second-biggest oil consumer.

Chinese industrial production in January and February was the lowest since the economy started recovering in October 2012, while the consumer price index rose to a 10-month high, data showed.

Brent crude fell 53 cents to $110.32 a barrel by 1205 GMT, having earlier reached as low as $109.90. US oil slipped 8 cents to $91.78.

"This morning we're starting to lose the punch from Friday due to bearish statistics from China, with very disappointing retailer growth," said Bjarne Schieldrop, a commodity analyst at Stockholm-based SEB. "The statistics are hurting commodities overall. Trading is back to the underlying bearish sentiment."

Analysts are seeing a market focus on negative information and poor market sentiment originating from the United States as well as China.

"Rather than benefiting like the equity markets from the positive US labour market data and the resulting rosier demand prospects in the world's largest oil consumer, oil prices are under pressure from a firmer US dollar and speculation about a premature end to the Fed's bond purchasing programme," Commerzbank analysts said in a research note.

Brent futures slipped on Friday after the US dollar rose to a 3-1/2-year high against the yen and a three-month peak against the euro following robust growth in US employment.

A stronger greenback can weigh on commodities priced in dollars, such as oil.

On Monday, the British pound and the euro extended last week's losses against the dollar, which however weakened against the Japanese yen.

OUTLOOK

The market was looking ahead to monthly reports from OPEC on Tuesday and the International Energy Agency on Wednesday.

Traders were also keeping an eye on political conflict in the Middle East. Syrian rebels broke through government lines to ease a siege of their positions in the strategic central city of Homs despite coming under fierce aerial bombardment, opposition campaigners said.

Syria is not important to the oil market, but investors have long worried the unrest there may spread to major oil exporters.

Tensions in the Middle East over Iran's controversial nuclear programme have helped keep Brent futures above $100 through most of 2012 and this year.

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