US Retail Sales And World Bank Cutting Its Outlook For Growth

While markets are nervously awaiting more data to gauge the global growth outlook, crude oil is steady around $93.50 while Brent is steady around $110.60 after the solid rise in the US’s retail sales in December revived hopes of demand growth for oil.

The 0.5% rise in December retail sales, compared with expectations of only a 0.2% increase, indicated that consumption in the world’s largest oil consuming nation is resilient in the face of automatic tax increases and government spending cuts.

However, although the retail sales data added to evidence of a slow but steady recovery in the US, caution is building ahead of more earnings and data that will help markets gauge the global growth outlook, keeping oil prices in a limited range.

“U.S. retail sales are important data, but not that substantial to trigger a rally in oil prices. The market is looking for more positive factors to push prices higher and till then prices will trade in a tight range,” said Tetsu Emori from Astmax, Japan.

China's GDP due on Friday is one of the key data this week, since China is the world’s second largest oil consumer. “China's economy has bottomed out…The downside risks to China have reduced and the economy is likely to show signs of improving,” Emori added.

Meanwhile, gains were capped by concerns over a lack of agreement on the US debt ceiling and the latest report from the World Bank which shows that the “frustratingly slow economic recovery in developed nations is holding back the global economy.”

The Bank cut its outlook for global growth 2.4% in 2013 from June forecast of 3.0%. Moreover, Germany’s 2012’s GDP advanced even slower that expected, by 0.7% from 3.0% in 2011, while the US’s empire manufacturing unexpectedly fell to -7.8 in January. The Bank also reduced its forecasts for growth in the world's third-biggest user of oil, Japan, to 0.8% from 1.5%, while the euro region is expected to contract for the second year, while China’s GDP was cut to 8.4% from 8.6%.

Oil prices may also face some downside pressures as crude stockpiles might rise by 2.2 million barrels according to the US Energy Department report today, yet losses might be limited as worries about supply disruption from the Middle East continue.

Crude is trading as of this writing around $93.45 a barrel compared with the opening at $93.41 and with the highest at $93.60 and the lowest at $93.35, while heating oil rose 0.53% to 3.0274 on forecasts for colder weather on the U.S. East Coast and Midwest.

Brent is trading as of this writing around the $110.70 after rising 0.36%, while natural gas is trading around $3.419 per 1,000 cubic feet after falling 1.04%, and gasoline is trading around $2.7061 a barrel after falling 0.02%.