Crude Lower With Euro Zone, China In Focus

Crude oil fell slightly on Thursday to the $94.00 level as the weakening global economic outlook triggered demand worries, yet the surprise drop in crude inventory in the United States and an attack on an Algerian gas field kept losses limited.

Lack of agreement on the U.S. debt ceiling, the ongoing earnings season, the drop in Australia’s new jobs and a series of data showing worsening economic conditions in Europe weighed on the financial markets reviving demand worries and caution.

Crude demand is “not in good shape” said the United Arab Emirates Oil Minister Mohamed Al-Hamli as the Organization of Petroleum Exporting Countries (OPEC) reduced output to the lowest in more than a year in December, a report showed yesterday.

According to Al-Hamli, OPEC is waiting to see how Europe will handle its debt crisis. Investors look nervously to events in Greece and Spain, as the IMF approved a 3.24 billion euro ($4 billion) loan tranche to Greece while Spain will hold a bond auction.

Meanwhile, the better-than-expected U.S. earnings were capped by caution ahead of key Chinese data on Friday. The growth numbers, industrial output and retail sales from the world’s second largest oil consumer will be closely watched.

Crude is trading as of this writing around $93.99 a barrel compared with the opening at $94.22 and with the highest at $94.22 and the lowest at $93.79, while heating oil rose 0.20% to 3.0052 on colder weather in the U.S. East Coast and Midwest.

Capping losses however, was the unexpected fall in U.S. crude inventories as imports dropped and fuel stocks rose. The Energy Information Administration showed that crude stocks fell by 951,000 barrels to 360.3 million barrels in the week to January 11.

Also adding to upside pressures on oil prices was an attack on Algerian gas field , were militants killed three people, including a Briton and a French national and kidnapped 41 foreigners, including seven Americans, triggering supply concerns from the region.

Brent is trading as of this writing around the $109.80 after rising 0.11%, while natural gas is trading around $3.405 per 1,000 cubic feet after falling 0.87%, and gasoline is trading around $2.7235 a barrel after rising 0.08%.