Crude Oil Pulls Back on Negative Economic Data out of China

Is Gold Close to Confirming a Breakout to All Time Highs

Oil prices have been struggling to sustain the price rally which began about a week ago as the majority of data points continue to point to the slowing of the global economy and thus the view that oil demand growth is also likely to slow (see latest IEA highlights below). Overnight China's oil import data came in at 21.6 million tons (about 5 million barrels) according to the Chinese Customs Agency. This is the lowest level of crude oil imports since December of 2011. One can question the transparency of the various macroeconomic data points out of China but the fact that oil imports are declining is very supportive of the view that the main economic growth engine of the world is actually slowing.

China's July exports of all good increased by just 1% compared to year earlier levels but a significant downturn versus the 11.3% increase in the month of June. In addition industrial output is also slowing as new lending levels dropped significantly in July from 919.8 billion Yuan to 540.1 billion Yuan. Sales to China's number one customer... the EU declined by 16.2% last month while sales to the US declined by 0.6%.....Read Dominik Chirihellas entire article.

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Oil Trades at $74 on China Economic Tightening, Saudi Concern

Oil was little changed at $74 a barrel after China sought to temper its economic expansion and a Saudi adviser said the U.S. aims to cut oil imports. China, the world’s second largest oil consuming country, ordered banks to set aside more deposits as reserves for the second time in a month on Feb. 12, signaling slower economic growth and reduced energy demand. Saudi oil ministry adviser Mohammad al-Sabban said today the U.S. is promoting nuclear power as a means of cutting oil imports.

“The market is a bit uneasy about the Chinese tightening,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. China is not “yet the largest importer; it’s not yet the largest consumer region. Still, it is one of the most important ones.” Crude oil for March delivery traded at $74 a barrel, down 13 cents, at the halt of electronic trading for the contract on the New York Mercantile Exchange at 1:15 p.m. Trading resumes at 6 p.m. New York time. There is no floor trading today because of the U.S. Presidents’ Day holiday.

The dollar advanced to $1.3601 against the euro, from $1.3632, as of 3:15 p.m. in New York. The Dollar Index, a six- currency gauge of the greenback’s value, rose 0.14 percent to 80.366. A rise in the value of the dollar curbs demand for commodities as an alternative investment. “What we would be looking for in the next week is how the U.S. dollar is going to behave,” said Harry Tchilinguirian, head of commodity derivatives research at BNP Paribas SA in London. “You are going to be looking at how the dollar is going to behave against a number of currency pairs”....Read the entire article.


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