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Crude oil slumps after China CPI data, U.S. supply report in focus

Published 07/09/2013, 03:58 AM
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Investing.com - Crude oil futures edged lower on Tuesday, after data showed that inflation in China accelerated at a faster rate than expected last month.

Investors now looked ahead to the release of key U.S. weekly supply data to gauge the strength of oil demand from the world’s largest consumer.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD102.94 a barrel during European morning trade, down 0.2% on the day.

New York-traded oil prices held in a range between USD102.72 a barrel, the daily low and a session high of USD103.39.

Official data released earlier showed that consumer prices in China rose 2.7% in June from a year earlier, above expectations for a 2.5% increase and accelerating from a 2.1% rate of increase in May.

The faster-than-expected increase in the rate of inflation dampened hopes policy makers in Beijing could introduce fresh easing measures to boost economic growth in the world’s second largest economy.

The Asian nation will release a report on trade balance figures on Wednesday.

Oil traders now looked ahead to the release of fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 3.3 million barrels.

Investors also awaited the release of the minutes of the Federal Reserve's June meeting on Wednesday, for further hints regarding the direction of U.S. monetary policy.

Nymex oil prices rallied to hit USD103.97 a barrel on Monday, the strongest level since May 3, 2012, as market players continued to monitor political turmoil in Egypt amid concerns over a disruption to supplies from the Middle East.

Violent clashes between the Egyptian army and supporters of ousted President Mohamed Morsi left more than 50 people dead and hundreds injured on Monday, according to various reports.

Traders were concerned that the escalating violence would lead to the closure of the Suez Canal, which transports approximately 2 million barrels of crude oil a day from northern Africa to the U.S.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery shed 0.35% to trade at USD107.01 a barrel, with the spread between the Brent and crude contracts standing at USD4.07 a barrel.

The gap between the contracts narrowed to the smallest level since December 2010 last week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.

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