[OIL MARKET] Oil Trades Near 3-Month Low as Economic Slowdown May Cut Demand
Crude oil was little changed after falling to a three-month low yesterday on signs that a U.S. economic slump will extend into 2009, paring fuel demand in the world's biggest oil consumer.
The U.S. economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first half of the year, a Bloomberg News survey showed. China's July crude- oil imports fell 7 percent from a year earlier after global prices increased to a record, discouraging refiners from purchasing raw materials to process into fuels.
``The market focus has shifted to the weakness in demand,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. ``The Chinese economy isn't growing as strong as last year.''
Crude oil for September delivery was at $114.10 a barrel, down 35 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:20 a.m. Singapore time. Prices are up 59 percent from a year ago. Yesterday, futures fell 75 cents, or 0.7 percent, to settle at $114.45 a barrel, the lowest close since May 1.
Oil has declined 23 percent from the record $147.27 reached on July 11.
Prices are also down as the dollar traded near a 5 1/2- month high to the euro, reducing the need for commodities as a hedge against inflation. The dollar gained on speculation the economic slowdown that started in the U.S. is spreading.
The dollar traded near a 5 1/2-month high against the euro, at $1.4872 at 10:23 a.m. in Tokyo from $1.4909 yesterday.
Prices rose in early trading yesterday as five days of clashes between Russia and Georgia threaten alternative export routes from Azerbaijan, needed because of a pipeline fire.
A fire on the Turkish stretch of the Baku-Tbilisi-Ceyhan pipeline was extinguished yesterday following an explosion last week. Georgia is a key link in a U.S.-backed southern energy corridor that connects the Caspian Sea region with world markets, bypassing Russia. The Baku-Tbilisi-Ceyhan pipeline ships Azeri Light crude.
Tankers moved as much as 15 miles (24 kilometers) out to sea, Batumi-based Garsevan Jorbenadze, a ship agent at TeRo Co. Ltd. who arranges for ships to dock and load, said by phone yesterday. The nearby oil terminal of Supsa, also on the Black Sea, appears to be operational, with one ship waiting to enter the port, he said.
Brent crude oil for September settlement was at $112.41 a barrel, down 26 cents, on London's ICE Futures Europe exchange at 10:06 a.m. Singapore time. It fell 66 cents, or 0.6 percent, to settle at $112.67 a barrel yesterday, the lowest since May 1.