Prices mostly lower as traders mull China GDP, Egypt and the dollar
By Myra P. Saefong and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures drifted near the $106-a-barrel level on Monday, trading mostly lower, as traders mulled developments in Egypt, some strength in the U.S. dollar and a slowdown in China’s economic growth for the second quarter.
Light, sweet crude-oil futures for delivery in August CLQ3 -0.32% inched lower by 30 cents, or 0.3%, to $105.65 a barrel on the New York Mercantile Exchange.
Oil prices had gained about 2.6% last week after Federal Reserve Chairman Ben Bernanke indicated the U.S. central bank was in no hurry to raise interest rates.
Data Monday showed that the Chinese economy grew 7.5% in the second-quarter. The gross domestic product result matched projections from separate Dow Jones Newswires and Reuters surveys of economists, but was down from the first quarter’s 7.7% advance.
“While the growth is maintaining itself, it is not scorching,” said analysts at the Kilduff Report.
“The growth rate has different impacts on different markets,” they said. “For oil prices, the growth rate is not enough to keep global oil markets tight or under-supplied, which undermines a pillar of support for triple-digit [priced] oil.”
Some analysts said there are concerns that the economic slowdown in China may not have run its course.
“In the near term, the downside risk for growth has become much more elevated now than a few months ago,” said Ren Xianfang, a senior economist at IHS Global Insight. “Uncertainties remain huge with domestic construction-sector and external demand, and we expect China’s growth could slip even further to below 7.5% in the second half” of 2013.
In the U.S., retail sales rose but by less than expected. Data showed that June retail sales rose a seasonally adjusted 0.4%, according to the Commerce Department. Economists polled by MarketWatch expected a climb of 0.9% overall.
Separately, the New York Fed said the Empire State manufacturing survey rose in July. The general business conditions index rose to 9.5 from 7.8 in June, versus expectations for a 5.9 reading.
In currency trading, the ICE dollar index DXY +0.27% , which measures the greenback’s performance against a basket of six major global rivals, rose to 83.124, after trading under the 83-point level late Friday in North America.
Commodity prices tend to drop when the U.S. dollar strengthens, as a stronger greenback makes them more expensive to holders of other currencies.
Oil traders also watched the latest developments in Egypt. Concerns over disruptions to oil trade in the region have been a key reason why oil prices topped $100 a barrel earlier this month.
The Wall Street Journal on Sunday reported that prosecutors froze the financial assets of senior leaders in Egypt’s Muslim Brotherhood, the political movement that backed ousted President Mohammed Morsi.
On Nymex, futures prices for gasoline traded little changed. August gasoline RBQ3 -0.14% was at $3.12 a gallon, after finishing last week with a gain of almost 8% on the back of refinery issues.
August heating oil HOQ3 +0.06% was up by less than half a cent at $3.03 a gallon. Natural gas for August delivery NGQ13 -2.09% edged down by 6 cents, or 1.7%, to $3.58 per million British thermal units.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
