Oil falls on disappointing euro zone data
London, February 14, 2013
Oil prices fell on Thursday after euro zone figures showed the world's largest trading bloc sank deeper into recession at the end of last year, curbing expectations of accelerating global growth and higher energy demand.
Worries over Middle East oil supplies limited the price fall after the UN nuclear watchdog said it failed again to clinch a deal in talks with Iran on investigating its nuclear programme.
Brent crude oil slipped 40 cents to $117.48 per barrel by 1200 GMT. April Brent futures became the front-month contract on Thursday. US crude was down 10 cents at $96.91.
"The market has weakened because of the GDP numbers," said Miswin Mahesh, commodities analyst at Barclays. "It's been a macro sell-off this morning with the GDP numbers coming out rather than any fundamental move in itself. Most asset classes have sold."
Economic output in the euro zone fell 0.6 percent in the final quarter of 2012, according to the EU's statistics office, compared with a decline of 0.4 percent expected by analysts polled by Reuters.
Data showed the three biggest economies in the euro zone -Germany, France and Italy --all shrank more than expected.
The German economy contracted by 0.6 percent, its worst performance since the global financial crisis was raging in 2009 and well below analysts' forecasts.
But tensions in the Middle East, the world's largest oil exporting region, helped underpin prices.
"All the discussions about Iran are keeping oil high while it looks like China and the U.S. are growing which is further supporting prices," Thorbjoern Bak Jensen, analyst at Copenhagen-based Global Risk Management, said.
"However, lower growth in Europe will dampen oil demand."
Investors are now waiting for the outcome of the meeting of finance ministers and central bankers of the G20 countries later this week which may throw more light on the outlook for the global economy.
Optimism that oil consumption will increase as the economy revives has been offset this week by a report from the West's energy watchdog, the International Energy Agency (IEA).
The IEA on Wednesday cut its 2013 oil demand growth forecast by 90,000 barrels per day (bpd) to 840,000 bpd, contradicting assessments of two other oil market forecasting agencies.
The US Energy Information Administration and the 12-member Organisation of the Petroleum Exporting Countries both this week forecast faster-than-expected growth in global oil demand this year. – Reuters