Oil eased towards $121 a barrel on Friday after the economy of energy-hungry China expanded at the slowest rate in nearly three years, reinforcing the prospect of slower growth in demand for oil.
Braking the price slide was caution ahead of talks between Iran and five permanent members of the UN Security Council plus Germany about Tehran's disputed nuclear programme.
“The Chinese numbers were a little bit disappointing ... (but) we're not heading into a new substantial downward trend,” said Tony Machacek, an oil futures broker at Jefferies Bache Ltd. “There's still quite a few geopolitical issues knocking about.”
Brent crude, which expires later in the day, slid 30 cents to $121.41 a barrel by 13:50 SA time. The contract is heading for a fourth straight weekly decline.
US oil slipped 36 cents to $103.28.
The annual growth rate in China, the world's second-largest economy, eased to 8.1 percent in the first quarter, short of expectations.
“The Chinese numbers turned out weaker than expected, but there's still a lot of fuel demand over there, so the oil market's not going to come crashing down just yet,” said Rob Montefusco, an oil trader at Sucden Financial.
China's implied oil demand rose 3.4 percent in March from a year earlier to 9.46 million barrels per day (bpd), the lowest in five months, Reuters calculations based on preliminary government data showed on Friday.
The daily rate was 200,000 bpd, or 2 percent, lower than the 9.66 million bpd in February, which was the second-highest level on record.
SAUDI VOW
Top oil exporter Saudi Arabia stressed again on Friday that it was determined to bring down high oil prices and was working with fellow OPEC members towards that goal.
“We are seeing a prolonged period of high oil prices,” Oil Minister Ali al-Naimi said in a statement during a visit to Seoul. “We are not happy about it. (The Kingdom of Saudi Arabia) is determined to see a lower price and is working towards that goal.”
Higher output from Saudi Arabia and weaker demand growth have broken a two-year cycle of tightening conditions in the oil market, the International Energy Agency said in its monthly report on Thursday.
Investors will seek further indications on additional monetary stimulus, or quantitative easing, when US Fed Chairman Ben Bernanke speaks later in the day.
“Any comments from Fed officials which toe the official line on no change till late 2014 will sap the greenback of buying demand and allow the oil price to rise,” Tim Waterer, senior trader at CMC Markets, said in a report. - Reuters