Crude: Settles only slightly higher than yesterday
Crude settles only slightly higher
Crude oil ended near unchanged today, as traders faced rising Chinese inflation that could prompt the country to tighten credit and curb its appetite for commodities, such as oil.
The China data overshadowed some of the more positive sentiment this week on a tightening in US fuel supplies and signs of increased demand that had sent oil to over $83 per barrel yesterday.
Light, sweet crude for April delivery settled 2 cents higher at $82.11 per barrel on the New York Mercantile Exchange.
London Brent crude on the ICE futures exchange settled 20 cents, or 0.3% lower, at $80.28 per barrel.
China's consumer price index rose faster-than-expected 2.7% in February from a year ago, and quickened the pace of a 1.5% rise in January.
The inflation increase fed into expectations that China could tighten its monetary policy and raise interest rates in an attempt to cool down its rapidly expanding economy.
This sparked fears that China could limit its appetite for oil, which kept oil prices trading in negative territory for much of the session.
China's Commerce Minister Chen Deming said today at the National People's Congress that the country faces inflationary pressures from growing international commodity prices and will closely monitor import prices.
"The inflation data was hotter than it [China] would like and bodes for further curtailment in monetary policy that could impact on energy demand," said John Kilduff, partner of Round Earth Capital in New York. "It kept a lid on prices from moving higher."
Positive oil data reports from China this week had helped to underpin rising crude prices. Refinery processing rates hit a record 8.35 million barrels per day in February while it also imported a hefty 4.85 million barrels of crude in February.
Meanwhile, two economic data reports from the US failed to give much impetus to oil. The US trade deficit unexpectedly narrowed in January, down 6.6% to $37.29 billion, according to the Commerce Department.
The Labor Department reported that the number of workers applying for jobless benefits fell by 6,000 last week, although it was a smaller fall than the 9000 expected by economists polled by Dow Jones.
Kilduff said that with oil prices at such "lofty heights" it needs more positive macroeconomic data reports to support it.
Oil prices had hit a new eight-week high yesterday and briefly burst through the $83-per-barrel level after the US reported a larger-than-expected drop in gasoline and distillate stocks, that includes diesel and heating oil, and a rise in oil demand.
There is still some momentum for another push higher, with $84 per barrel a possible target, said Andy Lebow, senior vice president for energy with MF Global in New York. But he added that "traders are questioning what the impetus will be to take us there or through it."