BLBG:Crude Oil Declines on Economic Outlook; Brent Slides
Oil fell for the third time in four days after Iran agreed to resume talks on its nuclear program and economic reports in the U.S. and China raised concern about fuel demand.
Futures slid as much as 1.4 percent after climbing 1.8 percent on April 5. International negotiations with Iran’s government are scheduled to start this week over its nuclear program. China said inflation in March accelerated more than forecast, reducing the government’s leeway to boost the economy. The U.S. created a less-than-forecast 120,000 jobs in March, the smallest increase in five months, an April 6 report showed.
“The payroll number seems to be quite negative, so probably people are thinking there will be a slowdown in the economy in the U.S.,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. (8734) in Tokyo. “It might be regarded as a downside risk for the oil market and also for oil demand.”
Oil for May delivery declined as much as $1.44 to $101.87 a barrel in electronic trading on the New York Mercantile Exchange and was at $102.05 at 11:37 a.m. Singapore time. The contract closed at $103.31 on April 5. Prices have gained 3.3 percent this year.
Brent crude for May settlement slid or 0.9 percent to $122.36 a barrel on the London-based ICE Futures Europe exchange. The premium of the European benchmark to New York futures was at $20.34, the widest gap in three days. Markets were closed in New York and London on April 6 for public holidays.
Iran Talks
Iran and the five permanent United Nations Security Council members plus Germany will meet for nuclear talks starting April 14 in Istanbul, European Union spokesman Michael Mann said yesterday. The last meeting was in January 2011. The government in Tehran is under increasing economic pressure from trade, financial and energy sanctions, including U.S. penalties on banks that process payments for Iranian crude.
President Mahmoud Ahmadinejad said Iran will continue its nuclear course even if the whole world stands opposed, state-run Al Alam TV reported today.
“The Iran talks are going to be a non-issue,” said Jeremy Friesen, a commodity strategist at Societe Generale who forecast oil in New York will average $125 a barrel in the second half of the year. Iranian officials “don’t want the oil price to come down. The best strategy for them is to keep a high oil price,” he said.
Brent crude may rise to $135 a barrel if the sanctions on Iran go through and there is no release from strategic petroleum reserves held by developed nations, Friesen said in an interview with Bloomberg Television.
China Inflation
Consumer prices in China rose 3.6 percent from a year earlier after gaining 3.2 percent in February, the National Bureau of Statistics said on its website today. That was more than the median 3.4 percent estimate in a Bloomberg News survey of 33 economists. Faster inflation may limit the government’s options to stimulate growth in the second-largest crude user.
In the U.S., job creation in March lagged behind the median estimate of 205,000 in a Bloomberg survey.
Speculators reduced bullish bets on oil by the most in more than three months as U.S. output grew to the highest level since 1999, boosting stockpiles, according to the Commodity Futures Trading Commission’s Commitments of Traders report on April 6. Money managers reduced net long positions, or wagers on rising prices, by 10 percent in the seven days ended April 3, the biggest drop since Dec. 20, the report showed.
Oil in New York has technical support along its 100-day moving average around $101.62 a barrel today, according to data compiled by Bloomberg. On the daily chart, stochastic oscillators have dropped below 30, a reading that signals futures have fallen too quickly and further losses may not be sustainable. Buy orders tend to be clustered near chart-support levels.
To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
