Brent, WTI Crude Fall as China Export Drop Signals Slow Economy

Brent and WTI crude fell for the first time in three days after exports from China unexpectedly shrank, stoking speculation that the world’s second-largest oil consumer may not reach its economic growth target. Brent slid as much as 1.2 percent in London. China’s overseas shipments declined by 18.1 percent in February from a year earlier, the biggest drop since August 2009, the General Administration of Customs reported on March 8. A median 7.5 percent increase was projected in a Bloomberg News survey of 45 economists. West Texas Intermediate rose 1 percent on March 7, the most in four days, as hedge funds increased bullish bets. “There’s an element of concern and it’s obviously something that goes together with the fact that PMI has also been soft,” Dominic Schnider, the head of commodities research at UBS AG’s wealth-management unit in Singapore, said of data earlier this month that showed a slowdown in China’s factory output. “Clearly it weighs a little bit but I’d be little bit cautious to read too much into it.” Brent for April settlement fell as much as $1.25 to $107.75 a barrel on the ICE Futures Europe exchange and was at $107.93 at 4:31 p.m. Seoul time. The volume of all futures traded was about 48 percent above the 100-day average. WTI for April delivery slid as much as $1.53, or 1.5 percent, to $101.05 a barrel in electronic trading on the New York Mercantile Exchange. The U.S. benchmark crude was at a discount of $6.68 to Brent.

Chinese Economy

The drop in China’s exports was the most since the global financial crisis, dealing a blow to confidence after Communist Party leaders meeting in Beijing set a 7.5 percent economic growth target for this year. The nation imported 23.05 million metric tons of crude in February, down 18 percent from a record-high in January, the customs data show. China will account for about 11 percent of global oil demand in 2014, compared with 21 percent for the U.S., according to forecasts from the International Energy Agency in Paris. In Libya, the government vowed to prevent an oil tanker from leaving a rebel-held port as it seeks to reassert control over the country’s main source of revenue. The vessel arrived in Es Sider, the nation’s largest export terminal, after Libyan armed forces refused orders to fire on the ship, Prime Minister Ali Zaidan said on March 8. Libya, a member of the Organization of Petroleum Exporting Countries, controls Africa’s biggest crude reserves. Hedge funds and other large speculators expanded their net-long position on WTI in the week ended March 4, according to the U.S. Commodity Futures Trading Commission. Managed money bets that prices will advance, in futures and options combined, outnumbered short positions by 346,544 contracts, the Washington-based regulator said in its weekly Commitments of Traders report on March 7. Source :  http://www.bloomberg.com/news/2014-03-10/brent-crude-slides-as-china-exports-drop-wti-slips-in-new-york.html