Oil's Drop Is Longest in 9 Weeks
Source: Bloomberg, Grant Smith and Christian Schmollinger (1/20/11)
"Inflation bolstered speculation that China will take more steps to cool the economy."
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.