Oil prices slipped after China said it would raise key interest rates.
The People’s Bank of China will hike deposit and lending rates by 25 basis points in the latest attempt to curb inflation and prevent the economy from overheating. Higher interest rates will likely cool China’s economic growth and cut demand for oil and metals.
China is the world’s second largest energy consumer behind the US.
Meanwhile, mass protests in Egypt continued today, however, the violent clashes between the protesters and supporters of incumbent president Hosni Mubarak appear to have stopped, calming fears that oil shipments through Egypt’s Suez Canal could be disrupted.
US light, sweet crude for March delivery, currently the most active contract on the New York Mercantile Exchange (NYMEX), declined to US$86.24/barrel, while April crude dropped to US$89.38/barrel.
March Brent Crude retreated to US$97.66/barrel on the ICE Exchange.
Supermajors BP (LON:BP) and Shell (LON:RDSB) were little moved.
Cairn Energy (LON:CNE) dropped 2.5% and Tullow Oil (LON:TLW) declined marginally.
BG Group (LON:BG) bucked the trend, advancing 1.25%.
Salamander Energy (LON:SMDR) tacked on nearly 1%, while other midcaps declined.
Premier Oil (LON:PMO) was at the bottom of the pile with a 7.5% loss.
Melrose Resources (LON:MRS) and Soco International (LON:SIA) shed 2.7% and 2.4% respectively.
Heritage Oil (LON:HOIL) dropped 1.2%.
JKX Oil & Gas (LON:JKX) declined marginally, as did service company Wood Group (LON:WG).