For the first time since mid-February , oil slipped to under $120 a barrel, prompted by fears of a weakening Chinese economy, signals of ample supply to advance economies, and renewed lobbying by Saudi Arabia.
Benchmark future-dated Brent stands at $121.83, having dropped to $119.60.
China’s GDP growth slowed sharply to 8.1% y-o-y in Q1 – the slowest in three years – from 8.9% in Q4 2011, though analysts think further central banking measures have already arrested this decline.
Weakness in Eurozone consumer countries continues to weigh on prices, with Spain’s re-entry to the debt danger-zone in recent days, raising fears that the indebtedness of European countries will lead to a demand slump.
Nascent progress on what has been billed as a final round of meetings with Iran over its nuclear program have also helped to soften prices. The ‘P5+1’ countries will meet with an Iranian delegation in Baghdad on 23 May.
Deutsche bank analysts have highlighted a recent fall in the spread between Brent and WTI crude prices, claiming it suggests demand destruction, a factor which could lead to a further drop in prices.
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