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Oil prices drop on weak China data, high supplies
[NEW YORK] Oil prices fell on Tuesday on weak Chinese trade data and skepticism about the prospects of major petroleum producers agreeing to limit output.
US benchmark West Texas Intermediate for April delivery shed US$1.40 at US$36.50 a barrel on the New York Mercantile Exchange.
In London, Brent North Sea oil for May delivery lost US$1.19 at US$39.65 a barrel.
The declines came after Chinese customs data showed exports sank 25.4 per cent in February, the largest decline since May 2009. The data also showed a 13.8 per cent drop in Chinese imports, raising further questions about the health of the world's second-biggest economy.
Gene McGillian of Tradition Energy said the poor Chinese data, along with the chances for a bearish US petroleum inventory report Wednesday, mean the oil market may be "a bit overextended" after WTI advanced about US$10 over the last month or so.
Those gains have been built on expectations that talks between Saudi Arabia, Russia and others could result in an agreement to limit output.
However, analysts said the market will need proof of concrete action to push higher.
"Until we actually see signs these huge amounts of oil have been reduced, the market will have a problem picking up its head too much from these levels," Mr McGillian said.
Analysts also cited a report overnight from Goldman Sachs that rued "a premature surge in commodity prices that we believe is not sustainable" following solid rises in prices of oil, copper and other commodities.
"Only a real physical deficit can create a sustainable rally which is still months away," Goldman said.