* Oil looking at second straight week of losses
* China’s industrial output up 9.3 pct, vs forecast of 12
pct
* China inflation stays tame, room for easing seen
By Zaida Espana
LONDON, May 11 (Reuters) – Oil fell to under $112 a barrel
on Friday following a weak reading of industrial growth in
China.
China’s industrial production in April grew at its slowest
pace in nearly three years, which along with poor trade numbers
on Thursday, suggest the world’s No. 2 economy continues to slow
down after a weak first-quarter performance.
Markets were also rattled by an unexpected $2 bllion trading
loss at Wall Street giant JP Morgan, which pushed
jittery investors away from risky assets.
“The news out of JP Morgan last night started global markets
on the weak side while Chinese numbers were not that good,” said
Olivier Jakob from Zug-headquartered Petromatrix.
By 0946 GMT, Brent June futures fell 86 cents to
$111.87 a barrel. The benchmark, which fell to a three-month low
on Monday, is headed for its second week of losses.
The U.S. light sweet June contract dropped $1.04 to
$96.04 a barrel, resuming its downturn after ending a six-day
slide on Thursday. U.S. crude is also on track for a second
straight week of decline after touching its lowest level since
mid-December on Wednesday.
China’s implied oil demand fell in April to its lowest in
six months and showed the first year-on-year decline in at least
three years, as refineries scaled back crude runs to undergo
maintenance.
Implied oil demand from the world’s number two oil consumer
fell 0.5 percent in April from a year earlier to 9.31 million
barrels per day (bpd), the lowest since October 2011, Reuters
calculations based on preliminary government data showed on
Friday.
The data highlights China’s potential contagion from an
ongoing crisis in the euro zone, where Spain and Greece continue
to fire-fight mounting debt problems.
Global demand growth this year will remain broadly
unchanged, the International Energy Agency (IEA) said in its
monthly report, raising it by just 20,000 bpd from its previous
report to 790,000 bpd.
The agency expects prices to remain high due to tension
between the West and Iran, despite a dramatic improvement in
world supply resulting in a big build in stocks.
WEAK OUTLOOK
An improved global supply scenario is also weighing on oil
prices. The Organization of the Petroleum Exporting Countries
pumped 1.62 million barrels per day above its supply target in
April, filling gaps caused by a large number of supply outages
globally. Analysts are however warning that OPEC could trim
output in response to swelling stockpiles.
“The unusually large global inventory builds in the first
half of 2012 will lead to a prolonged slump in the need for OPEC
oil, requiring substantial cuts in OPEC’s output,” Leo Drollas,
chief economist for Centre for Global Energy Studies told an
industry conference in Singapore.
“These will come about, but not quickly enough to prevent
the price of oil from sagging.”
Brent hit highs above $128 in March amid fears about supply
disruptions from key producer Iran following Western sanctions.
VTB Capital’s Andrey Kryuchenkov sees Brent supported at
$112, with key short-term support at $110-$110.5, but does “not
expect sustained gains at the moment”.
