Oil falls towards $123 on profit-taking - Emirates24|7

Oil falls towards $123 on profit-taking

 

Oil fell towards $123 (Dh452.64) a barrel on Tuesday on profit-taking and after a fall in China's oil imports in April, the first on-year drop in 18 months, raised questions over demand in the world's second-largest oil consumer.

US light crude for June delivery lost 83 cents at $123.40 a barrel by 0701 GMT, after earlier falling to as low as $123.10. It had settled on Monday down a hefty $1.73 after striking a new intraday record high of $126.40.

London Brent crude fell 73 cents to $122.18.

"When news like the Chinese imports comes out, it makes sense to take profit. But is demand really killed or only rationed? It will take a lot of damage to revise the overall trend," said Tony Nunan, risk management executive with Tokyo-based Mitsubishi Corp.

China's April crude oil imports fell by 3.9 per cent from a year ago to 3.47 million barrels per day (bpd), and were also down from the record of 4.07 million bpd in March, official Chinese data showed.

The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up six-fold since 2002.

But analysts said the dip in Chinese imports may be a one-off adjustment, as refiners ran down stocks after unusually high March purchases.

Following quick growth in the first quarter, year-to-date imports are still up 9.8 per cent on a year earlier.

Traders also tried to assess the impact of a strong earthquake in the southwestern province of Sichuan, where the death toll neared 10,000.

PetroChina has suspended oil flows at a major fuel pipeline to check for possible damage after a powerful earthquake hammered southwest China, company sources said.

A prolonged halt at the pipeline that supplies most of the fuel to the quake-hit region could force production cuts at the 200,000 bpd Lanzhou refinery, the largest in western China, the sources said.

Adding another threat of tightening supplies, Iran is reviewing its crude output but no decision has yet been taken on any changes, Oil Minister Gholamhossein Nozari said on Tuesday.

The semi-official Fars News Agency earlier quoted an informed source as saying the world's fourth-largest oil producer would start cutting crude output next month, probably by 400,000 to 1 million bpd.

Weekly US inventory data to be released on Wednesday will provide further direction to the market after an unexpected fall in distillates stocks, which include heating oil and diesel fuel, pushed prices to new highs last week.

US crude inventories are expected to have risen for a fourth-straight week, by an average 1.9 million barrels on an uptick in imports, while products stocks would also rise, helped by an increase in refinery utilisation, a preliminary Reuters poll of analysts found.

Distillate supplies were expected to have risen 1.0 million barrels. Gasoline stocks were seen posting a small increase of 300,000 barrels. 

 

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