U.S. crude oil slipped for a fourth straight day to end sharply lower Tuesday, mostly on demand growth concerns and with the dollar strengthening against some major currencies. A strong dollar limits buying in dollar-priced commodities as it makes them costlier to holders of other currencies.
Earlier today, the International Energy Agency in its monthly Oil Market Report pegged its oil demand projection up by 65,000 barrels a day to 90.6 mbd for 2013. Nonetheless, the International Energy Agency in its report termed production in North America growing at a record pace as a positive crude and product "supply shock," eveb as refining capacity is projected to outpace demand in emerging markets.
Barclay's, in its recent report, said China's oil demand growth has eased from 8 percent year-on-year between September last year to January to around 3 percent between February and April. Nevertheless, the bank expects Chinese oil demand to grow 5 percent this year.
Light Sweet Crude Oil futures for June delivery, the most actively traded contract, plunged $0.96 or 1.0 percent to close at $94.21 a barrel on the New York Mercantile Exchange Tuesday.
Crude prices for June delivery scaled a high of $95.66 a barrel intraday and a low of $93.85.
Yesterday, oil ended lower mostly on demand growth concerns after a sharp decline in refined crude output for April in China and some soft economic data out of the world second largest economy. Investors also weighed speculations the U.S. Federal Reserve will cut back on its quantitative easing program following some upbeat macroeconomic data out of the country.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.57 on Tuesday, up from 83.22 late Monday in North American trade. The dollar scaled a high of 83.59 intraday and a low of 82.96.
The euro traded lower against the dollar at $1.2943 on Tuesday, as compared to $1.2975 late Monday in North America. The euro scaled a high of $1.3028 intraday and a low of $1.2932.
In economic news, the U.S. Labor Department said imports prices fell by 0.5 percent in April following a revised 0.2 percent drop in March. Economists had expected import prices to match the 0.5 percent decrease originally reported for the previous month. At the same time, the Labor Department said export prices slid 0.7 percent in April compared to a revised 0.5 percent decrease in March. Export prices had been expected to edge down by 0.1 percent.
From the eurozone, confidence among German investors increased less-than-expected in May as worries over the poor economic situation in area continued to weigh, a survey by the Centre For European Economic Research (ZEW) revealed. The ZEW indicator of economic sentiment rose marginally to 36.4 in May from 36.3 in April. This was notably below the score of 40 forecast by economists. The outcome was, however, better than in March, when the indicator fell by 12.2 points.
Eurozone industrial production growth accelerated more than expected in March, largely due to an increase in energy output. Industrial output advanced 1 percent month-on-month in March, Eurostat reported. The rate of growth was bigger than the 0.3 percent rise seen in February and the 0.5 percent growth forecast by economists.
Later today, the API will release its crude oil inventories report for the week ended May 10.
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