Oil falls on lower demand outlook, China data

AP News
Posted: Aug 10, 2012 3:06 PM
Oil falls on lower demand outlook, China data

NEW YORK (AP) — The price of oil fell Friday on fresh concerns about the Chinese economy and a lower forecast for global oil demand from the International Energy Agency.

China said Friday that the country's exports grew just 1 percent in July from a year earlier while import growth slowed to 4.7 percent. That suggests growth continues to slow in the world's second-largest economy.

Meanwhile, the IEA lowered its forecast for global crude demand for the year to 89.6 million barrels a day from 89.9 million. That included a downward revision of 200,000 barrels a day for China. The agency also cut its forecast for oil demand in 2013 to 90.5 million barrels per day from 90.9 million previously.

The IEA said the reduction was due to "a combination of persistently high (oil) prices and a weak economic backdrop."

Benchmark crude fell 49 cents to $92.87 a barrel in New York. In London. Brent crude dropped 27 cents to $112.95 on the ICE Futures exchange.

U.S. crude still finished the week with a gain of $1.47 per barrel while Brent rose $4.01 per barrel.

Oil has for the most part followed a pattern over the past few weeks. It falls initially after gloomy economic news from Europe or China, but then recovers on hopes government officials or central bankers will act to boost their economies. Oil then drops again when no action is forthcoming.

Phil Flynn of Price Futures Group suggests that scenario may be played out.

"The market is getting a little tired of promises with no action," he said. He expects oil prices to "ratchet down" without new stimulus measures.

At the gas pump, the U.S. average rose a penny overnight to $3.67 per gallon, according to AAA, Wright Express and the Oil Price Information Service. That's up about 10 cents from last week.

Other futures prices on the New York Mercantile Exchange:

— Natural gas fell 17.5 cents, or 5.9 percent, to $2.77 per 1,000 cubic feet, the lowest close in a month.

— Heating oil fell 2.45 cents to $3.0205 per gallon.

— Gasoline less than a penny to $3.004 a gallon.