Crude Oil Declines First Time in Three Days as China's Growth May Slow

Oil fell for the first time in three days in New York because of signs that China’s measures to cool inflation may curb economic growth in the world’s second-biggest crude user.

Crude declined as much as 0.4 percent after the Conference Board, a New York-based research organization, said a leading economic indicator for China dropped for the first time since 2008. West Texas and Brent crude are both poised to gain this week as tension mounted in the Middle East.

“This year China has, in very quick steps, implemented quite a few measures -- property curbs, reserve requirement hikes, interest rate hikes,” said Selena Ling, head of treasury research at Oversea-Chinese Banking Corp. in Singapore. “These at some stage will have some dampening on market sentiment.”

Crude for March delivery fell as much as 32 cents to $86.04 a barrel on the New York Mercantile Exchange, and was at $86.09 at 3:46 p.m. Singapore time. The contract has risen 0.6 percent this week, the most since the five days through Jan. 14. The March contract in New York expires on Feb. 22. April crude was at $88.85 a barrel, up 1 cent.

Shipping traffic through Egypt’s Suez Canal is “normal” and isn’t affected by a workers’ movement demanding better pay and working hours, said the chief of navigation at the state- owned canal authority. Hundreds of workers went on strike yesterday along the Suez Canal to demand better wages, the New York Times reported.

Brent for April settlement was at $102.94 a barrel, up 35 cents, on the ICE Futures Europe exchange inLondon. The contract has risen 1.5 percent this week, the fourth consecutive increase.

Brent-WTI Spread

A glut of oil at Cushing, Oklahoma, the delivery point for the U.S. futures, has weighed on New York prices relative to Brent. The difference between the April contracts in London and New York was at $13.90 a barrel today, compared with $13.75 yesterday.

“WTI prices do not make any sense, the discount to European oil is far too big,” said Juerg Kiener, chief investment officer at Swiss Asia Capital Ltd. in Singapore, a fund manager. “Geopolitical tensions will remain and as such any set-back in prices will be a buying opportunity.”

Oil supplies at Cushing jumped to a record 38.3 million barrels in the week ended Jan. 28. Inventories were at 37.7 million in the seven days through Feb. 11, according to Energy Department data.

The spread narrowed yesterday from $15.94 on Feb. 16, as Brent dropped 1.2 percent compared with a 1.6 percent gain in West Texas crude.

Middle East Tensions

Oil prices may increase next week as mounting Middle East tensions bolster the risk of a disruption of shipments from the region, a Bloomberg News survey showed.

Twenty of 46 analysts, or 43 percent, forecast crude oil will rise through Feb. 25. Fifteen respondents, or 33 percent, predicted prices will decline and 11 estimated little change. Last week, 48 percent said futures would decrease.

Libya’s “Day of Anger” protests against Muammar Qaddafi led to clashes with pro-government forces yesterday in which at least 19 people were reported killed. Libya holds the largest proven oil reserves in Africa, with 44.3 billion barrels in 2009, according to the BP Statistical Review of World Energy.

Countries in the Middle East and North Africa were responsible for 36 percent of global oil production and held 61 percent of proved reserves in 2009, according to BP.

(Source: http://finance.yahoo.com/news/Crude-Oil-Declines-First-Time-bloomberg-2072737678.html?x=0&.v=1)