Crude oil fell for the first day in five after China, the world’s fastest growing energy consuming country, sought to cool its economic expansion. Oil dropped below $74 a barrel as the People’s Bank of China ordered banks to set aside more deposits as reserves for the second time in a month, boosting the dollar. An Energy Department report today showed a bigger than forecast increase in inventories.
“All of the markets still need every bit of stimulus the central banks can provide,” said John Kilduff, a partner at Round Earth Capital, a New York based hedge fund that focuses on food and energy commodities. “This move augurs for diminished demand and lower prices.” Crude oil for March delivery fell $1.29, or 1.7 percent, to $73.99 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures have dropped 6.8 percent this year. Oil increased for the first week in five.
China’s central bank said today it will raise banks’ reserve requirement ratio by 50 basis points. China’s policy makers aim to avert asset bubbles and restrain inflation after flooding the economy with money last year to drive a recovery from the first global recession since World War II. “This means it’s more difficult for the Chinese banks to lend, and China has been the bright spot in an otherwise unspectacular global economic recovery,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.....Read the entire article.
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