Crude oil futures were very slightly down in London trading Monday, with
few market signals and slowing growth indicators from China.
At 0931 GMT, ICE Brent crude for August delivery was down 16
cents, or 0.15%, at $108.65 a barrel. Nymex crude for August delivery
was down 47 cents, or 0.44%, at $105.48 a barrel.
Deutsche Bank's analysts highlighted the tight spread between
U.S. and North Sea benchmarks: "WTI-Brent remains firmly in the
spotlight as the WTI rally this week, sparked by steep U.S. crude oil
inventory draws, narrowed the spread to the lowest since November 2010."
The spread was as low as $3.17 Monday.
Looking forward, however, Deutsche noted: "Focus has shifted
to Brent due to Nigerian supply outages amidst the North Sea moving into
maintenance; this implies a tighter balance for Brent which may then
drive the spread to WTI wider."
China's gross domestic product in the second quarter grew by
7.5% on-year, slower than the 7.7% registered for the first quarter, but
at par with the average forecast of 18 economists surveyed by Dow Jones
Newswires.
However, China's industrial output in June disappointed, growing at 8.9% on-year compared with a forecast of 9.1%.
"There was a minor sense of relief attached to the Chinese GDP
result today, despite the result being in line with expectations," Tim
Waterer, senior trader at CMC Markets said in a note to clients. He said
some market participants expected weaker numbers and the GDP data
"offered mild comfort to risk assets."
Slowing growth in China, the world's second-largest consumer
of oil after the U.S., and its impact on oil demand and prices is a
major cause of concern for oil markets.
Last month, the U.S. Energy Information Administration trimmed
its 2013 oil-demand growth outlook for China to 4.1%, from an earlier
growth forecast of 4.4%. This was followed by another cut in China's oil
demand growth by the International Energy Agency.
Macroeconomic headwinds, tighter credit conditions and slower
growth could see China's oil demand expectations surprise to the
downside, Citigroup said in a note to clients.
"The fourth quarter should provide a seasonal lift in demand
but risks are skewed to the downside," the house said, adding that it
was keeping its Brent crude oil price forecast for the third quarter
unchanged at $105 a barrel and for the fourth quarter at $100 a barrel,
despite bullish developments in the last few weeks.
Crude oil prices are supported by political unrest in Egypt and supply disruptions in Libya and the North Sea.
Later this week, markets will shift focus to U.S. Federal
Reserve Chairman Ben Bernanke's testimony on the economy before
Congress.