Oil prices declined in tandem with equity markets around the globe today as demand for riskier assets was affected by caution ahead of this week’s key Chinese data, which will include updates on inflation and industrial production and weak German data.
Germany reported that its industrial production dropped 0.9 percent in June after climbing 1.7 percent in the previous month as manufacturing output dipped one percent.
In addition, the Bank of England today slashed its UK growth forecast for 2012 to zero from 0.8 percent, putting more pressure on European stocks.
Losses in oil futures were curbed by reports of a decline in North Sea production and comments form president of the Federal Reserve Bank of Boston Eric Rosengren.
The Boston Fed chief said the US economy was “treading water” and called for an unlimited quantitative easing (QE) programme to support the sluggish recovery.
The comments from Rosengren, who is not a voting member of the policy-setting Federal Open Market Committee (FOMC), fuelled speculation that the Fed could launch a third round of QE at its next meeting in September.
Meanwhile, today's closely watched weekly inventories report from the Department of Energy may show another decline in America’s crude stockpiles.
According to a Bloomberg News survey, oil stockpiles fell 1.6 million barrels in the week to August 3 following a drawdown of 6.5 million barrels in the previous seven days.
The American Petroleum Institute (API) reported yesterday that US inventories shed a massive 5.4 million barrels last week.
US light, sweet crude for September delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell 11 cents to US$93.56/barrel this afternoon.
September Brent crude declined 12 cents to US$111.88/barrel on the ICE Exchange.
Today’s top risers in the oil and gas sector were:
Oilex (LON:OEX), up 14 percent at 6.42 pence at midday
Max Petroleum (LON:MXP), up 12 percent at 4.2 pence
PetroNeft Resources (LON:PTR), up 12 percent at 7 pence
Heritage Oil (LON:HOIL), up 10 percent at 163.7 pence
Sefton Resources (LON:SER), up 7.5 percent at 2.15 pence
Melrose Resources (LON:MRS), up 7 percent at 130.25 pence
The top fallers were:
Jubilant Energy (LON:JUB), down 9.5 percent at 18.14 pence at midday
Bluebird Energy (LON:BBE), down 4.5 percent at 0.5 pence
3Legs Resources (LON:3LEG), down 3.5 percent at 37 pence
Gulf Keystone Petroleum (LON:GKP), down 3 percent at 207.5 pence
Volga Gas (LON:VGAS), down 3 percent at 85 pence