BLBG: Oil Is Little Changed Amid Concern Over Pace of Demand Growth
By Alexander Kwiatkowski
Feb. 1 (Bloomberg) -- Oil was little changed after falling for four days, as speculation mounted that China will rein in record lending growth, crimping demand from the world’s second- biggest energy consumer.
Oil, which dropped in January for the first time in six months, may extend its decline as supplies in the U.S. increase and demand lags behind year-earlier levels, according to a Bloomberg News survey of analysts. Hedge fund managers and other large speculators reduced net-long positions in New York oil by 26 percent last week.
“Investors are taking money out of the oil market and we are going back to fundamentals,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “There is a fear that China’s steps will lead to a slowdown in economic growth and demand for commodities.”
Crude oil for March delivery was at $73.12 a barrel in electronic trading on the New York Mercantile Exchange, up 23 cents, at 9:51 a.m. London time. The contract earlier fell as much as 40 cents, or 0.6 percent. On Jan. 29, it fell 1 percent to $72.89, the lowest settlement since Dec. 21.
Oil lost 8.2 percent in January, the first monthly decline since July and the biggest drop since December 2008. Commodities declined the most in 13 months on concern over the pace of the recovery in global demand. The Standard & Poor’s GSCI Index of 24 raw materials, including crude, fell 7.3 percent in January.
Equities Fall
Stock markets in Asia and Europe dropped as manufacturing surveys added to speculation that Chinese policy makers will rein in record lending growth. The MSCI Asia Pacific Index slumped 0.3 percent after the two surveys of purchasing managers showed rising export orders and inflation pressures in China. The Dow Jones Stoxx 600 declined as much as 0.8 percent.
Sabotage to oil pipelines in Nigeria and an end to a rebel cease-fire in the country’s main oil-producing region failed to rally prices.
Brent crude oil for March settlement was at $71.75 a barrel on the London-based ICE Futures Europe exchange, up 29 cents, at 9:51 a.m. local time. The contract earlier fell as much as 33 cents, or 0.5 percent. On Jan. 29, it slipped 0.9 percent to $71.46, the lowest settlement since Oct. 12.
“Even some potentially positive news for the oil market such as the attack in Nigeria didn’t have any effect,” said Fritsch. “OPEC is already pumping more oil that its quotas. The attack may contribute to better quota compliance.”
Nigeria Sabotage
Royal Dutch Shell Plc’s Nigerian unit said it halted some flow stations in the country’s southern oil region after sabotage caused a pipeline leak. The leak was detected Jan. 30, the same day the Movement for the Emancipation of the Niger Delta, the main rebel group in the region, said it was ending an “indefinite cease-fire,” after three months.
South Korea’s oil imports dropped a third month in January to 74.5 million barrels from a year earlier as refiners reacted to weak overseas demand for products. Imports gained 5.5 percent from December, the Ministry of Knowledge Economy said in an e- mailed statement.
“There’s not a huge amount of material recovery in physical demand for oil at this stage,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “We’re seeing economies faced with a bit of a headwind when it comes to the withdrawal of stimulus packages.”
Hedge-fund managers and other large speculators reduced net-long positions in New York oil futures in the week ended Jan. 26, U.S. Commodity Futures Trading Commission data show.
OPEC Output
Speculative long positions, or bets prices will rise, outnumbered short positions by 99,620 contracts, the Washington- based commission said Jan. 29 in its Commitments of Traders report. Net-long positions fell by 34,761 contracts, or 26 percent, from a week earlier.
The Organization of Petroleum Exporting Countries reduced crude production in January for the first time in five months. Output declined 45,000 barrels a day to an average 28.955 million, according to a Bloomberg News survey of oil companies, producers and analysts.
OPEC, which pumps 40 percent of the world’s crude, cut supplies in late 2008 in response to a drop in global demand. The 12-member group left output targets unchanged at a Dec. 22 meeting in Luanda, Angola.
To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net.
