Oil prices fall as dollar firms
LONDON – Oil prices dropped on Monday as the dollar firmed against rival currencies and in the wake of weak Chinese economic data, analysts said.
New York’s main contract, West Texas Intermediate crude for delivery in April, shed $1.06 to $106.34 a barrel.
Brent North Sea crude for April was down 65 cents at $125.33 in early afternoon deals.
“The new week gets underway, crude oil prices are falling in harmony with the other commodities. The reason for this is the much firmer US dollar,” said Commerzbank analyst Carsten Fritsch.
“The better-than-expected US labour market data (last Friday) severely dampened hopes of renewed quantitative easing of US monetary policy, which had a positive impact on the US dollar and a negative impact on commodity prices.”
An improving dollar makes raw materials such as oil more expensive for buyers holding weaker currencies.
Article continues after this advertisementConcerns over China’s energy demand were meanwhile stoked after customs data released Saturday showed the economy swung to a trade deficit of $31.48 billion in February.
Article continues after this advertisementThe deficit — which is the largest for at least 12 years — comes as demand continues to falter in China’s key US and European export markets.
“There has been a pullback in oil prices, mostly as a reaction to the huge trade deficit in China in February and concerns over slower growth in China,” said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.
The customs data follow figures Friday showing China’s inflation rate slowed sharply in February and factory output growth also slipped.
China’s weak figures outweighed bullish data showing that its monthly crude oil imports reached a record monthly high in February and US figures showing a further surge in jobs growth in the world’s leading economy, analysts said.
It imported 23.64 million tonnes of crude oil last month, equivalent to 5.98 million barrels a day.
China is the world’s biggest energy consumer, while the United States is the largest consumer of crude oil.
