Oil prices slid towards $72 a barrel today, as investors locked in gains from a near eight-month high settlement a day ago, but stronger-than-expected China factory output and retail sales data lent support.
Hopes of an economic recovery had boosted oil to its high yesterday, and official data showing a rebound in China's industrial growth and retail sales in May added to the positive economic picture.
Data also showed refinery output in the world's number two energy user rose 10.7 per cent in May versus a year earlier, in its third monthly rise in seven months to a fresh record high.
US crude fell 23 cents to $72.45 a barrel by 6.40am, after peaking yesterday at $73.23. London Brent crude fell 29 cents to $71.50.
“The downward movement is the usual two steps forward, one step back. Some market players may be a bit cautious about oil prices being a little overvalued," Ben Westmore, a commodities analyst at National Australia Bank, said.
Oil yesterday settled at its highest since October 20th after a three-day rally, as the International Energy Agency revised upwards its outlook for global oil demand, and US data showed a pick-up in retail sales and slowdown in jobless claims.
The Organization of Petroleum Exporting Countries (OPEC) will issue its monthly report later today.
Amid growing hopes for the economy, Bank of Canada Governor Mark Carney warned against excess optimism over “green shoots”, saying there was no evidence yet of a sustainable global recovery.
“Economies are going to grow initially because of the scale of monetary and fiscal stimulus, not in spite of it ... and self-sustained private demand is not yet there,” he said.
Asian Development Bank President Haruhiko Kuroda said the US economy is showing signs of recovery but a reduction of household debt will take a long time.
Kuroda said Japan, the United States and European Union will likely see a rebound in second-half 2010.
Reuters