Oil Futures Settle Lower On Demand Concerns

Oil prices drifted lower on Tuesday amid concerns about the outlook for energy demand after data showed China’s industrial production and retail sales both missed expectations.

A somewhat subdued U.S. dollar, and supply concerns due to wildfires in Canada helped limit the downside in oil prices.

West Texas Intermediate Crude oil futures for June ended lower by $0.25 or about 0.4% at $70.86 a barrel.

Brent crude futures settled at $74.91 a barrel, down $0.32 or 0.4% from the previous close.

“The global economic outlook has too many question marks and that is not giving energy traders a lot of confidence in buying crude,” says Edward Moya, Senior Market Analyst at OANDA. “Right now too much oil is still available and we aren’t seeing meaningful triggers to make the market tight over the short-term.”

Moya adds that the oil market will get tighter as the US starts to refill the SPR and as China’s recovery unfolds. “The initial start of refilling the SPR with 3 million will have a small effect on physical markets but it should help provide some support around the $68-70 a barrel region,” he says.

In Chinese economic data, industrial production posted an annual growth of 5.6% in April, faster than the 3.9% increase in March, the National Bureau of Statistics said. However, the pace of expansion was weaker than economists’ forecast of 10.9%.

At the same time, retail sales growth accelerated sharply to 18.4% in April from 10.6% in March. Still, the rate missed expectations for a 21% increase.

Source: Read Full Article