Oil futures eased to near $102 a barrel today as fresh concerns over economic growth in the world's top oil consumers, China and the United States, weakened the demand outlook.
The crude benchmark fell more than 7 per cent during April, its biggest monthly decline in 11 months, hurt by indicators suggesting the global economy remains in a fragile state.
Brent crude lost 20 cents to $102.17 a barrel by 8.10am, after falling the most in nearly two weeks yesterday. US oil was down 39 cents at $93.07 a barrel.
“It’s the same picture of relative slow demand,” Oliver Jakob, analyst at Petromatrix, said.
Growth in China’s manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
"Crude prices are down today because of the big stock increase in the API and the worse-than-expected China PMI," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
Investors were awaiting the US ISM manufacturing data later today after business activity in the US Midwest unexpectedly contracted in April to its lowest level since September 2009.
At a two-day meeting that wraps up today, the Fed is widely expected to maintain its stimulus policy to support an economic recovery that is nearly four years old but still too weak for the job market to truly heal.
“There are going to be important macro movements over the next two days with the Fed, and the ECB (European Central Bank) meeting tomorrow,” Mr Jakob said.
The ECB is widely expected to cut interest rates to a new record low of 0.5 per cent after data yesterday showed inflation in the euro zone has fallen to a three-year low and unemployment had hit a record of 12.1 per cent.
Supply concerns
Data from the American Petroleum Institute yesterday showed US crude stocks rose by 5.2 million barrels, larger than a forecast 1 million barrel increase.
The more closely-watched report from the Energy Information Administration (EIA) will be released at 2.30pm today.
Supply from the Organization of the Petroleum Exporting Countries is set to average in April 30.46 million barrels per day (bpd), up from 30.18 million bpd in March, a Reuters survey showed.
Saudi Arabia’s energy minister said yesterday the kingdom does not plan to expand its oil production capacity to 15 million barrels per day, dispelling a suggestion put forth by a member of his country’s royal family.
