LONDON—Crude-oil futures sank ahead of U.S. oil supply data, while optimism about strong economic growth reported by China was tempered by concerns that inflation there could lead to policy moves that could cool the economy.
The front-month March Brent contract on London's ICE futures exchange was down 50 cents, or 0.5%, at $97.66 a barrel. The front-month February contract on the New York Mercantile Exchange shed 78 cents, or 0.9%, at $90.08 a barrel.
The gap in the prices of the two contracts is at its biggest since February 2009, with the value of Nymex futures depressed by ample supplies at the Nymex contract's delivery point in Cushing, Oklahoma.
The next U.S. government data on Cushing inventories are due at 11 a.m. ET, and a big decline could mark the beginning of a return to a narrower spread between the two contracts. Wednesday, the American Petroleum Institute, an industry group, said Cushing stockpiles dropped 600,000 barrels to 36.9 million barrels in the week ended Jan. 14.
"Traders seem to have been looking ahead to this week's report all week long," said Peter Beutel, president of the trading advisory firm Cameron Hanover, in a note to clients.
However, the API reported that oil inventories rose 3.5 million barrels nationwide, while gasoline and distillate stocks also jumped. Analysts had predicted a 900,000 barrel drop in oil inventories, a 2.3 million barrel increase in gasoline stocks and a 500,000 barrel addition to distillate inventories, according to a Dow Jones Newswires survey.
Rising inventories in the EIA data would play into a persistent worry in the oil futures market that investors underestimated the amount of supply available to fast-growing economies such as China. Both Brent and Nymex futures have recently hit two-year highs, with Brent coming within $1 of reaching triple digits last week.
Demand continues to shine; China, the second-biggest oil consumer after the U.S., should see oil imports rise by 11.2% this year, according to China National Petroleum Corp.'s Research Institute of Economics and Technology. China's National Bureau of Statistics Thursday also reported that fourth-quarter gross domestic product grew 9.8% from a year earlier, above economists' expectations for a 9.2% expansion.
But members of the Organization of Petroleum Exporting Countries are sitting on about 5 million barrels a day of spare production capacity, and raised output to a two-year high in December, the International Energy Agency said earlier this week.
The oil market may not be able to count on such robust growth from China indefinitely, either. Along with the GDP figure, China's consumer price index rose 4.6% last month, and the country is gradually imposing lending restrictions to prevent runaway inflation. Those measures could also reduce oil demand by slowing economic growth.
