Oil eased to around $119 a barrel on Wednesday as weak economic data in Europe and the United States hit the outlook for demand, and a rise in weekly US crude inventories underlined ample supplies. The euro zone’s manufacturing sector slipped further into decline last month, a survey showed on Wednesday. U.S. private employers added fewer jobs than expected in April and new orders for U.S. factory goods in March fell. Brent crude for June slipped 60 cents to $119.06 a barrel by 1451 GMT, after settling 19 cents higher on Tuesday. U.S. crude for June was down 76 cents at $105.40. “It does feel a bit like we are in a negative death spiral,” said Bjarne Schieldrop, chief commodity strategist at SEB in Oslo. “Austerity measures over an extended period are showing up in disappointing economic activity.” Adding to the bearish tone, U.S. crude inventories rose by 2.84 million barrels last week, a report from the Energy Information Administration said, more than analysts’ average forecast of a 2.5 million-barrel rise. The EIA report at 1430 GMT also showed declines in stocks of gasoline and diesel, both of which were larger than analysts expected, and that crude stocks rose at the key oil hub of Cushing. “The report doesn’t seem to be supportive of a further rally,” said Gene McGillian, analyst at Tradition Energy. “The draws in product stocks are minimal, crude was up nearly three million barrels, there’s a record amount of crude at Cushing and U.S. oil stocks are at a twenty-year high.” The EIA, which requires oil companies to provide information on stock levels, reported a larger drop in crude supplies than industry group the American Petroleum Institute, which collects information on a voluntary basis. On Tuesday, the API reported crude stocks rose by 2 million barrels. Oil remains well below its 2012 high of more than $128 a barrel reached in March. Lingering worries about the outlook for China, the second-largest oil consumer behind the United States, also helped to pressure prices. “China is a concern, with new loans falling sharply last month. The question is whether the government’s easing measures have come in time for a soft landing,” said Gordon Kwan, head of energy research at Mirae Asset Management in Hong Kong. Chinese bank lending is estimated to have dropped 30 percent in April from a month earlier as demand for credit declined, the official China Securities Journal reported on Wednesday. Concern about disruption to supply from Iran has eased in recent weeks as more conciliatory words are coming from Jerusalem and Tehran, which has also helped to bring prices down from their high. Iran said it was seeking an end to Western sanctions over its arms program during talks with world powers and criticized France for helping Israel, the only country in the Middle East widely believed to have atomic weapons.
Oil slips to $119 on economy worries, US supplies
