Wednesday, October 20, 2010

Crude Oil Declines After Dollar Climbs, Chinese Economic Growth Slows

Crude oil declined as investors sold contracts against a rising dollar and the Chinese economy grew at the slowest pace in a year, potentially crimping demand in the world’s biggest energy consumer. Futures dropped as the U.S. currency rose against most of its counterparts, limiting the appeal of commodities as an inflation hedge. China’s economy grew 9.6 percent in the third quarter, according to government data. U.S. gasoline stockpiles increased unexpectedly last week, a report showed yesterday.

“Inventories of crude and products are still high so there is no fear of a global shortage,” Ken Hasegawa, a commodity derivative sales manager at broker Newedge in Tokyo, said in an interview. “The currency markets are key for every market at the moment.” The December contract lost as much as 64 cents, or 0.8 percent, to $81.90 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.93 at 1:03 p.m. Singapore time. Yesterday it advanced $2.38 to $82.54 a barrel.

Crude for November delivery surged $2.28 to close yesterday at $81.77, the biggest gain in 11 weeks. Prices are up 3.7 percent this year. The increase in China’s gross domestic product from a year earlier compared with economists’ median estimate of 9.5 percent. Consumer prices rose 3.6 percent last month, the statistics bureau said at a briefing in Beijing. China’s monthly crude oil processing volume increased the least in......Read the entire article.

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