20 September 2012, Sweetcrude, LONDON – THE Brent crude halted earlier declines and climbed towards $109 a barrel on Thursday, with some oil dealers saying prices had fallen too far, too fast.
A slew of bearish news – from weak China data to Saudi output pledges – has wiped more than $9 off Brent since last Friday.
“We do regard the scale and above all the speed of the price slide as excessive,” said a Commerzbank research note. “We expect to see a counter-movement in the next few days.”
Oil prices held unto most gains after US data showed the number of Americans filing new claims for jobless benefits fell last week.
Brent crude rose 38 cents to $108.57 a barrel by 1351 GMT. The North Sea global benchmark had sunk to $107.10 in earlier trade.
US October crude, which expires later on Thursday, was down 29 cents at $91.69 a barrel.
The HSBC Flash China manufacturing purchasing index (PMI) for September was 47.8, well below the 50-mark that separates contraction from expansion, although a shade higher than the nine-month low of 47.6 reached in August.
The weak China factory data came a day after the Ministry of Commerce said the export outlook in the world’s second biggest oil consumer was poor and demand would remain weak in the next few months.
“If China hits a wall, and Europe falls out from under us, then we’re going to be falling back into a recession, and that could be worse than the Great Depression,” said Tony Nunan, an oil risk manager at Mitsubishi Corp in Tokyo.
Adding to the bearishness was Saudi Arabia’s pledge to keep prices from rising too high.
Saudi oil minister Ali-al Naimi last week said the world’s top oil exporter was ready to take action to calm rising prices, which he said were not supported by market fundamentals.
Also in the United States, crude stockpiles jumped 8.5 million barrels last week, far more than the 1 million barrels forecast in a Reuters poll of analysts, according to data from the Energy Information Administration.
US imports of crude increased by 1.28 million barrels per day to 9.81 million barrels per day. Net crude oil imports hit their highest weekly level since January.
