BLBG: Oil Falls From Two-Year High on Speculation China May Raise Interest Rates
Oil fell the most in more than three weeks on speculation China will raise interest rates, curbing demand growth in the world’s biggest energy-consuming country.
Futures slipped as much as 2.6 percent after Chinese stocks tumbled the most since August 2009 on a report yesterday that showed consumer prices rose at the fastest pace in two years. China’s central bank may increase rates within weeks, according to a Bloomberg News survey.
“Anything that provides evidence of a slowing Chinese economy is likely to be reflected in oil-demand estimates,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington. “It would also tend to moderate bullish views for where oil prices will be in 2011.”
Crude oil for December delivery fell $1.36, or 1.6 percent, to $86.45 a barrel at 9:13 a.m. on the New York Mercantile Exchange. Futures dropped as much as $2.30, the biggest decline since Oct. 19.
Brent crude oil for December settlement slipped $1.09, or 1.2 percent, to $87.72 a barrel on the ICE Futures Europe exchange in London. The contract expires Nov. 15. The more actively traded January futures fell $1.11, or 1.3 percent, to $87.99.
Oil supplies from outside the Organization of Petroleum Exporting Countries will be higher than previously estimated next year on stronger output from North America and China, the International Energy Agency said.
Non-OPEC producers will provide 53.4 million barrels a day in 2011, or 250,000 barrels more than the agency’s estimate a month ago. Worldwide crude consumption will increase by 1.2 million barrels a day, or 1.4 percent, in 2011 to 88.5 million, the IEA said in a report today.
Futures may rise next week after an Energy Department report on Nov. 10 showed U.S. crude and fuel inventories tumbled, a Bloomberg News survey showed. Sixteen of 37 analysts and traders, or 43 percent, forecast crude will climb through Nov. 19. Twelve respondents, or 32 percent, predicted prices will decline and nine estimated there would be little change.
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
