Oil falls to near $106 amid China growth concerns
March 22, 2012 (WPVI) -- Oil prices fell to near $106 a barrel Thursday after weak manufacturing data suggested China's economy, and demand for crude, could grow less than expected this year.
By early afternoon in Europe, benchmark oil for May delivery was down $1.24 to $106.03 in electronic trading on the New York Mercantile Exchange. The contract rose $1.20 to settle at $107.27 per barrel in New York on Wednesday.
In London, Brent crude for May delivery was down 69 cents at $123.51 per barrel in London.
Chinese industrial production fell to a four-month low in March, according to HSBC's preliminary manufacturing index released Thursday. China is the world's second biggest consumer of oil behind the U.S.
"Weakening domestic demand continued to weigh on growth," HSBC said in a report. "China's slowdown has yet to finish."
Reports that France appeared to be considering releasing strategic oil reserves to lower oil prices - which was discussed earlier by the United States and Britain - also weighed on markets.
"In this situation, the oil price should find it difficult to make further gains, with the result that prices much above $125 a barrel are unlikely unless the Iran crisis escalates further," said a report from Commerzbank in Frankfurt.
Crude has hovered between $105 and $110 for the last month, up from $75 in October, amid the possibility that a military strike by Israel or the U.S. on Iran's nuclear facilities could disrupt global supplies.
The jump in oil prices in recent months has increased the price of gasoline and other crude products and raised fears in Asia that inflation could quicken. Inflation concerns have kept policymakers from implementing aggressive stimulus measures despite signs of slowing economic growth, said Irvin Seah, an economist with DBS bank in Singapore.
"Oil prices will hit everyone, which is why despite the downside risks to growth, Asian central banks have been standing back rather than cutting interest rates," Seah said.
In other energy trading, heating oil was down 0.88 cent at $3.2222 per gallon and gasoline futures slid 2.51 cents to $3.3201 per gallon. Natural gas added 0.9 cent at $2.369 per 1,000 cubic feet.
gas prices, national/world
- Apartments evacuated in Bucks Co. hazmat investigation 10 min ago
- Sunny and Cooler!
- Get the 6abc StormTracker app
- WATCH: Action News Online
- Suspect SUV in deadly hit and run caught on camera
- SEPTA trolley collides with taxi in West Philadelphia 3 min ago
- Man gets pinned under van in Logan crash
- Man seriously injured in crash on Roosevelt Blvd.
- Gunfire erupts on Delaware Ave. near SugarHouse Casino 23 min ago
- Off-duty cop shoots man during fight
- Malaysia jet may have turned back
- PSU trustee resigns, regrets Paterno vote
- Actress Sheila MacRae of 'Honeymooners' dies at 92
- Photos: $3.25M summer home in Ocean City, NJ