Oil's Drop Is Longest in 9 Weeks

Source:

"Inflation bolstered speculation that China will take more steps to cool the economy."

Oil fell for a third day, the longest losing streak in nine weeks, as inflation in China bolstered speculation the world's biggest energy user will take more steps to cool the economy and slow fuel demand.

Futures dropped as much as 1.1% after China said inflation was 4.6% in December as the economy expanded faster than forecast. The country raised interest rates twice in 2010 and increased bank-reserve requirements on Jan. 14. Crude inventories in the U.S., the largest oil consumer, gained the most in eight weeks, the industry-funded American Petroleum Institute said yesterday.

"The Chinese data has done little to ease concerns about future monetary policy tightening, and so we're seeing oil following other markets in taking a small pull-back," said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Crude for March delivery, the most active contract, declined as much as $1 to $91.81 a barrel on the New York Mercantile Exchange. It was at $91.02 at 12:53 p.m. London time. Brent crude for March settlement dropped as much as $0.75, or 0.8%, to $97.41 a barrel on the ICE Futures Europe exchange in London.

The February contract on the Nymex, which expires today, was down $0.78 at $90.08 after falling as low as $89.90. Yesterday February futures settled at $90.86 in New York, the lowest since Jan. 10, while Brent added 0.4% to $98.16, the highest settlement this week.

China's economic growth accelerated to 9.8% in the fourth quarter as industrial production and retail sales rose. The expansion rate exceeded the 9.4% median estimate in a Bloomberg News survey of 22 economists.

Growing pressure on China to tighten monetary policy overshadowed data showing the country processed a record amount of oil in December.

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe