Brent Slips on Strong Dollar
Brent crude oil slipped on Thursday morning after weak Chinese data brought weakening global demand prospects to the spotlight. The commodity traded at $104.55 at 7:08 GMT on Thursday morning.
According to CNBC, the Chinese economy grew at its slowest rate in 13 years in 2012 and has shown little sign of improvement so far in in 2013. As the world's second largest oil consumer, investors have worried as the nation's lack luster data suggests only a tepid recovery.
The latest Chinese PMI data showed the nation's factory activity had fallen to a nine month low in June, which suggests the nation's oil demand will fall as well. The PMI data has fueled concern that the nation would miss its 7.5 percent growth target and post a sharp decline in the second quarter.
Also weighing on Brent prices was a stronger dollar which found support from Chairman Ben Bernanke's press conference following the US Federal Reserve meeting. Bernanke confirmed what most investors had anticipated; that the Fed was planning to taper its $85 billion per month bond buying plan toward the end of the year if the nation's economic data strengthened. The bank is aiming to end the program in mid 2014.
Rising inventories in the US despite the summer peak driving season, a time when stocks are normally depleted, put pressure on crude prices as well. Although analysts had forecast a 500,000 barrel decrease in US stockpiles for the week ending on June 14th, data showed the nation's oil inventories rose by more than 300,000 barrels.
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