Oil steady near $98 after China economy jitters
The price of oil was steady near $98 a barrel on Thursday after plunging the day before on concerns that China's economic slowdown is deepening.
By mid-afternoon Europe, benchmark U.S. crude for April delivery was down 10 cents to $97.89 a barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the Nymex contract fell $2.04 to close at $97.99, its first close below $100 in a month.
Brent crude, used to set prices for international varieties of crude, was down 21 cents to $107.81 on the ICE Futures exchange in London.
Data showing a decline in Chinese exports in February fueled worries that the world's second-largest economy is weakening further. Growth in factory output, investment and retail sales, reported Thursday, was unusually weak.
Also weighing on prices was the eighth consecutive week of rising U.S. stocks of crude oil, which increased by 6.2 million barrels last week, the Energy Information Administration said Wednesday. That contrasted with analysts' expectations of a rise of 2.3 million barrels.
Meanwhile, the Department of Energy surprised markets with the announcement of the sale of up to 5 million barrels of crude oil for April delivery from the Strategic Petroleum Reserve system "in order to appropriately assess the system's capabilities in the event of a disruption."
The test, which had been planned for several months, was needed because of the recent rise in U.S. crude oil production and other issues such as expanded pipelines and the increased use of U.S. crude oil terminals, the Department of Energy said.
Analysts, however, linked the test sale to the crisis in Ukraine.
"It is a small amount, and, since they have made oil available several times over the years, the need for a test is a dubious claim," said The Kilduff Report edited by Michael Fitzpatrick. "The more likely rationale was to remind the global market that the supplies are there to cover any shortfall resulting from likely sanctions on Russia over the Ukraine affair."
Oil prices spiked last week on fears Russia's military incursion into the Crimean Peninsula might lead to U.S. and European sanctions on one of the world's largest energy suppliers.
In other energy futures trading on Nymex:
- Wholesale gasoline shed 0.86 cent to $2.9472 a gallon.
- Heating oil declined 0.6 cent to $2.9195 a gallon.
- Natural gas lost 5.1 cents to $4.439 per 1,000 cubic feet.