Oil Near One-Month Low on U.S. Outlook, Rebounds After China Economic Data

Oil traded near the lowest in almost a month on speculation fuel demand may falter as the U.S. economy slows, countering signs of rising industrial output in China, the world’s second-largest crude user.

Futures were little changed after falling as much as 0.8 percent and climbing as much as 0.3 percent today. Crude pared earlier losses after a report showed China’s industrial production slowed less than economists forecast. Consumer prices in the country climbed 5.5 percent, the quickest pace since 2008. A report today may show U.S. retail sales fell in May for the first time in 11 months.

“The market is concerned about economic growth,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted crude in New York will average $100 a barrel this year. “The economics suggest oil should be lower rather than higher.”

Crude for July delivery was at $97.55 a barrel, up 25 cents, in electronic trading on the New York Mercantile Exchange at 3:09 p.m. Singapore time. The contract yesterday declined $1.99, or 2 percent, to $97.30, the lowest settlement since May 17. Futures have gained 29 percent in the past year.

Brent oil for July delivery rose 13 cents to $119.23 a barrel on the London-based ICE Futures Europe exchange. The more actively traded August contract advanced 22 cents to $118.64. The front-month European benchmark contract was at a premium of $21.69 to U.S. futures after climbing to a record $21.80 yesterday.

Chinese Economy

China’s factory output expanded 13.3 percent last month, the statistics bureau in Beijing said today. This beat a median 13.1 percent increase forecast by economists in a Bloomberg News survey. The gain in consumer prices matched the median estimate.

The ruling Communist Party is seeking to tame inflation and sustain growth after riots this month by migrant workers in the manufacturing hub of Guangdong. The central bank has raised interest rates four times since October to cool the economy.

Chinese refiners processed 38.47 million metric tons of crude in May, 6 percent more than a year earlier, data today from the China Federation of Logistics and Purchasing showed. Gasoline output climbed 3.6 percent and diesel production rose 8.2 percent. China uses more oil than any country except the U.S.

U.S. advance retail sales probably dropped 0.5 percent last month, according to the median estimate of 81 economists surveyed by Bloomberg News before a Commerce Department report today. Sales advanced 0.5 percent in April.

“Almost every day, there is some fresh economic data that seems to fit better in an anemic recovery than in one that is robust or dynamic,” Peter Beutel, president of Cameron Hanover Inc., an energy adviser in New Canaan, Connecticut, said today in an e-mailed note.

Fuel Supplies

U.S. gasoline stockpiles probably increased for a sixth week last week, according to a Bloomberg News survey before an Energy Department report tomorrow. Supplies rose 1 million barrels from 214.5 million, based on the median estimate of eight analysts. Crude inventories may have decreased 1.75 million barrels from 369 million, the poll showed.

The industry-funded American Petroleum Institute will report its own stockpile data today.

Oil in New York is likely to remain in a “consolidation range” of $95 to $105 a barrel, based on technical charts, according to The Schork Group Inc.

A breach of yesterday’s low of $96.13 a barrel may indicate prices will fall to $95.68 and $94.06, Stephen Schork, president of the consultant in Villanova, Pennsylvania, said today. A recovery to $98.10 will “clear a path” to $98.92 and $100.54, he said.

Bloomberg