NEW YORK-Oil prices tumbled yesterday as the dollar strengthened on renewed Euro zone credit worries, though fears remained that prolonged conflict in Libya could do long-lasting damage its oil infrastructure. Data showing that China, the world's second largest oil importer, unexpectedly posted the largest trade deficit in seven years also weighed on oil prices, analysts said. US crude for April delivery fell faster than its counterpart Brent crude, falling US$2.96 to US$101.42 a barrel. Data showing new US jobless claims rose last week and the country's trade deficit widened in January sparked economic growth worries and weighed on US crude.
US crude's losses extended from Wednesday, when data showed crude inventories rose well more than expected last week, with stocks at the key Cushing, Oklahoma, delivery hub hitting a record. In London, April Brent crude dropped US$1.75 to US$114.19 a barrel. Brent's premium against US crude again shot up, rising to more than US$13, after posting above US$11 on Wednesday. The premium hit a record above US$17 last week. Investors watch the changing fortunes of both contracts as they trade heavily on the spread between them. The euro fell against the dollar after rating agency Moody's downgraded Spain's credit, sparking negative sentiment toward struggling sovereign borrowers in Europe.
China suffered a US$7.3 billion trade deficit in February as the Lunar New Year holiday slowed exports and spurred anxieties about global economic growth, though economists said the sudden drop was likely to be temporary. But China's crude oil imports rose to the third highest level on record on a daily basis as refiners ramped up operations despite a lull in demand lull during the holidays. In Libya, state television said government forces had cleared Ras Lanuf of armed gangs, a reference to rebels, but rebel soldiers denied the eastern oil town had fallen to Muammar Gaddafi's troops. "The large explosions and enormous columns of smoke from storage tanks and other facilities in Ras Lanuf, close to the Es Sider terminal, are perhaps more than merely symbolic," Barclays Capital oil analysts headed by Paul Horsnell said.
"They represent a final fading of any residual realistic hope that the outage of Libyan oil could prove to be anything other than prolonged." An official from the Libyan oil company AGOCO told Reuters the company was making arrangements to market oil directly to foreign buyers, instead of through its state-owned parent, National Oil Corp. The port of Brega has run out of crude oil stocks, forcing crude tankers to cancel shipments or travel to Saudi Arabia, a source told Reuters. (Reuters)
