Brent futures fell on Monday, trading close to a nine-month low hit earlier in the day, after bleak Chinese and US data stoked concerns of an economic growth slowdown in the world’s top oil consumers.
China’s economic recovery unexpectedly stumbled in the first three months of 2013, with the annual rate of growth easing to 7.7 percent from 7.9 percent in the final quarter of last year. Economists had forecast 8-percent growth.
Brent for May settlement, which expired on Monday, fell as much as $2.56, to $100.55 per barrel on the London-based ICE Futures Europe exchange, and traded at $100.60 per barrel on Monday afternoon.
West Texas Intermediate for May delivery decreased as much as $3.24, to $88.05, in electronic trading on the New York Mercantile Exchange, the lowest since December 21. It was at $88.93 a barrel on Monday afternoon. The volume of all futures traded was 233 percent above the 100-day average.
Concerns over the energy demand outlook in the US were underlined last week after a Department of Energy report showed that oil supplies have risen to the highest level since July 1990. US crude oil inventories increased by 300,000 barrels last week to hit 388.9 million, dampening hopes of a robust recovery in oil demand from the world’s largest oil consumer.
The International Energy Agency cut its global oil demand forecast for 2013 for the third consecutive month. The agency reduced its estimate for global oil consumption by 45,000 barrels a day, to 795,000 barrels a day, citing weakening demand in Europe.
Political rumblings in Venezuela, Alaska
Nicolas Maduro’s win in Venezuela’s presidential election means state oil company PDVSA will continue funding the government’s socialist policies, while increasingly relying on deals with China and Russia. The late Hugo Chavez picked Maduro to continue his self-declared revolution in the OPEC country, where he nationalized most of the oil industry during his 14-year rule.
Maduro can be expected to increase oil sales to political allies, especially China, at the expense of the US, the traditional top buyer of Venezuelan crude, while taking on more debt from those partners, according to a report by Reuters. Venezuela currently exports about 430,000 barrels per day of crude and products to China, up from just a few thousand barrels per day in 2005, in repayment for loans totaling $36 billion.
The Alaska State Legislature has passed SB21, a multibillion-dollar oil tax cut, in hopes that it will lead to increased production. It came on the Legislature’s last scheduled day and in spite of fears that the impacts of SB21 are not well understood and will devastate Alaska’s budget.
The Senate was asked to agree to changes made in the House. Another option would have been to take the bill to conference committee for additional work. The House passed its version of SB21 on Sunday.
Canadian oil and gas firm Africa Oil (TSXV:AOI) plans to have four oil rigs operating in East Africa by the end of this year. In its 2012 financial and operating report, it stated that the rigs will be based in Kenya and Ethiopia.
The company said the focus of these rigs will be to continue drilling and testing wells in the Lokichar sub-basin in Kenya with improved efficiencies in an effort to reach commercial thresholds. It also plans to drill potential basin-opener wells at the Turkana and the Chew B’hir basins in its tertiary Rift play within Ethiopia. Africa Oil and its operating partner in Block 9 in Kenya are currently planning to drill the Bahasi-1 exploratory well.
Get the top stories on resource investing FREE!Learn what is going on before you buy from this FREE Special Report, Who is Kitco? to US Mint: Sold Out! – Top Articles from Resource Investing News.