Despite Moving Up in the Week, Crude Oil Prices Decline on Friday

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Despite Moving Up in the Week, Crude Oil Prices Decline on Friday
Despite Moving Up in the Week, Crude Oil Prices Decline on Friday

Despite Moving Up in the Week, Crude Oil Prices Decline on Friday

On Friday, the crude oil prices in Europe and the US fell a little amidst the news that economic news is not favoring for higher demand. Today, Brent crude for April delivery on London’s ICE futures exchange was trading lower by 25 cents, or 0.2%, at $110.05 a barrel. A similar trend was seen in the West Texas Intermediate or WTI.

Earlier on Wednesday WTI touched highs above $103 a barrel, levels not seen since early October; however, since then the prices have declined to some extent. A similar trend was seen in Brent’s which slid from Wednesday onwards as data from China cast uncertainty over the strength of the country’s economic growth rate.

ForexMinute has reported that China is a key market for crude oil. China in fact has become the largest consumer of oil and any weakness in the country’s economy could result in a significant drop in demand. Nonetheless, another major reason in lower price is that market research firm JBC Energy has come up with data that shows that crude stocks in the US were higher week-on-week.

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Lower Demand from China Affecting Demand

The report says that while the draw in distillate inventories was lower than expected, the increased production is a major reason that the oil prices are tanking. Also, both developments i.e. slow Chinese growth and plentiful supply of oil from the US are generating situation where the oil prices are not expected to grow in the next couple of months.

The week began with higher note for oil prices; however, the prices fell subsequently as the weak Chinese data from Wednesday took a part of the enthusiasm out of the recent rally. Also, as crude oil stocks at Cushing declined by 1.7 million barrels and thus fell below the five-year average which according to some analysts is a positive indication.

Though earlier the oil prices in the US increased a little as the country was in grip of sever snowfall and cold, the poor data aggravated the situation later on Friday. However, investors are looking for weather conditions when looking for investing in oil as according to them it is still quite cold and heating oil demand is getting tighter.

Also, as it is expected that the inventory of natural gas in the US has fallen, pushing up the price of the commodity is expected. Natural gas added 17.7 cents to $6.241 per 1,000 cubic feet.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com