Oil prices down as traders weigh 2013 demand

PanARMENIAN.Net - Oil prices fell Friday, Jan 18, even though data showed China's economy rebounded in the final quarter of last year, suggesting a possible increase in China's energy demand, according to The Associated Press.

Benchmark oil for February delivery was down 24 cents to $95.25 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gained $1.25 to finish at $95.49 a barrel. That was the highest close for crude on the Nymex since Sept. 17 and a result of the positive economic reports out of the U.S.

China's economy grew 7.9 percent in the fourth quarter of 2012, up from the previous quarter's 7.4 percent. In December, retail sales growth accelerated to 15.2 percent over a year earlier, up from the previous month's 14.9 percent, the National Bureau of Statistics reported. Factory output growth rose to 10.3 percent from November's 10.1 percent.

Data showing improvement in China, the world's No. 2 economy, suggests increased energy demand, a key driver of oil prices. But the U.S. could face a new economic crisis if political leaders fail to resolve discord over spending cuts and the country's borrowing limit, which needs to be raised to avoid an unprecedented federal default.

Caroline Bain, commodities analyst for The Economist Intelligence Unit, said that demand in 2013 could be affected "as the risk of more protracted debate over fiscal policy, which would sap sentiment, could emerge again later in the year."

Bain also said that the tax increases, including across-the-board payroll taxes, approved in the "fiscal cliff" deal at the end of last year could act "as a negative factor for consumption."

Brent crude, used to price international varieties of oil, fell 22 cents to $110.88 per barrel on the ICE Futures exchange in London.