Brent falls 7pc in April on economy woes
Tokyo, May 1, 2013
Brent crude benchmark fell more than 7 percent during April, its biggest monthly decline in 11 months, hurt by economic indicators in recent weeks suggesting the global economy remains in a fragile state.
Brent crude futures below $102 a barrel on Wednesday as investors worried about the outlook for growth in the world's two largest oil consumers, the US and China, and US oil stocks rose more than expected.
Growth in China's manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
Data from the American Petroleum Institute also showed U.S. crude stocks rose by 5.2 million barrels, larger than a forecast 1 million barrel increase.
Brent crude fell 94 cents to $101.43 a barrel by 0420 GMT, after falling the most in nearly two weeks on Tuesday. U.S. oil was down 43 cents at $93.04 a barrel.
"Crude prices are down today because of the big stock increase in the API and the worse-than-expected China PMI," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"Economic indices from China and Euro region have not been good, so better data from those areas, especially Europe, would likely be needed to trigger a rebound in prices," he said.
China's official purchasing managers' index (PMI) on Wednesday fell to 50.6 in April from an 11-month high in March of 50.9. Analysts had expected the April PMI to be 51.0.
The figures came on the heels of data showing U.S. Midwest business activity contracted in April and record European unemployment.
At a two-day meeting that wraps up on Wednesday, the Fed is widely expected to maintain its monthly purchases of $85 billion in bonds to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.
On the supply side, more oil is coming to market, according to a Reuters survey.
Supply in April from the Organization of the Petroleum Exporting Countries is set to average 30.46 million barrels per day (bpd), up from 30.18 million bpd in March, the survey showed.
OPEC crude oil output rebounded from its lowest monthly level in more than a year due to the resolution of export disruptions in Iraq and Libya and a rise in Iranian sales, the survey found.
"I think going ahead there is room for prices to go even lower and maybe below this year's low when you consider there is no shortage of supplies and demand has not really picked up," Hasegawa said.
The closely-watched weekly inventory report from the U.S. Energy Department's Energy Information Administration will be released on Wednesday morning at 10:30 a.m. EDT (14:30 GMT). – Reuters