Thursday, 26 March 2009

Oil falls more than US$1 on Japan export data

LONDON, March 25 — Oil fell by more than US$1 (RM3.63) today to below US$53 a barrel after weak export data from Japan and as investors paused to reassess bank clean-up plans, halting a global equities rally.

Japan, the world’s second-largest economy, posted a record drop in February for exports — down by 49.4 per cent — as global demand for Japanese cars and electronics evaporated.

Bearish supply and demand data in the world’s largest oil consumer the United States and in third-largest consumer Japan also pushed prices lower.

US crude inventories rose last week by 4.6 million barrels to 345.5 million barrels, data from industry group American Petroleum Institute showed yesterday, with imports rising and refinery utilisation down.

In Japan, crude oil import volumes fell by 13.9 per cent in February, their lowest tally for the month in 20 years, preliminary data from Japan’s Ministry of Finance showed.

“The Japanese numbers certainly spooked the market,” said Rob Montefusco, a commodities trader at Sucden Financial in London.

“Crude numbers for the API data were bigger than expected, and we’re looking for the DOE (Department of Energy) numbers today to be higher. The market is on the back foot at the moment,” he said.

US light crude for May delivery fell US$1.28 to US$52.70 a barrel by 1237 GMT, after touching a near three-month high above US$54 yesterday.

London Brent crude fell US$1.33 to US$52.16.

The US Energy Information Administration, a branch of the Department of Energy, will issue its separate weekly report on nationwide stockpiles today.

Analysts said an excess of crude supply on world markets would not disappear soon, as no demand was surfacing to mop up the excess, and last week’s strong rally might have been an overly earnest response to US government stimulus plans.

“The price rise we saw in the past week was a little early, a little excessive. There’s still not a lot of demand out there,” said Simon Wardell at Global Insight, an oil trading advisory.

An expanded Reuters poll of 15 analysts yesterday showed an average forecast build of 1.2 million more barrels in the week to March 20, with gasoline supplies down by 600,000 barrels.

“It’s a market not used to 6 million barrels of spare capacity out there. Today we’re getting a bit more gloom from the American package,” said Wardell.

Today, European stocks slipped as a recent rally on the back of a US plan to purge toxic assets from banks’ balance sheets lost steam and figures showed a deterioration of German corporate sentiment.

Last night President Barack Obama renewed calls for leading economies to boost stimulus spending, repair credit markets and extend aid to poor countries when Group of 20 leaders meet in London on April 2.

Speaking with cautious optimism on Wednesday, a Chinese central bank adviser said China, the world’s third-largest economy, was showing signs of improvement.

“Before (the economy) bottoms out, it has to bottom. I believe it has bottomed, with the stimulus package and signs of recovery in some industries,” said Fan Gang, who sits on the Chinese central bank’s monetary policy advisory committee, in a Reuters interview in Hong Kong. — Reuters