Oil falls on US drilling, shrugs off upbeat China data

Oil prices fell on Tuesday on concerns over increased drilling in the United States and as investors took profits after oil prices rose close to 1 per cent in the previous session.

Brent crude futures were trading at $47.67 per barrel at 6.39am, down 65 cents, or 1.4 per cent, from their last settlement.

Upbeat August Chinese industrial output growth did little to lift oil prices as the crude market remained in a profit-taking mode, traders said.

China’s industrial output grew the fastest in five months in August as demand for products from coal to cars rebounded thanks to higher government spending and a year-long credit and property boom.

Traders said the price falls on Tuesday were an indication that increasing oil drilling activity in the United States was still a concern even as crude closed higher on Monday because of a weaker dollar.

US West Texas Intermediate futures were down 73 cents, or 1.6 per cent, at $45.56 a barrel.

“People are seeing that rally we had on a very big decline in (US) inventories last week is a bit of a selling opportunity,” said CMC Market chief market analyst Ric Spooner.

Oil’s 4 per cent price decline since September 8th partly reverses a 10 per cent rally early in the month, which was fuelled by speculation that oil exporters could cap production.

“Investor appetite (for commodities) remains subdued,” Australian bank ANZ said in a note.

China’s state oil refiners are readying to export more diesel and gasoline in coming months as a bleak outlook for what is typically the nation’s period of greatest consumption sends shivers through an already saturated global market.

Reuters