Connect to share and comment

Oil prices drop as US spending cuts kick in

PlacardEnlarge
(Globalpost/GlobalPost)

World oil prices fell on Friday, with New York crude striking a two-month low point, as dealers eyed huge US spending cuts due to take effect and following weaker Chinese manufacturing data.

New York's main contract, light sweet crude for delivery in April, sank to $90.97 a barrel -- the lowest level since December 31 -- before recovering slightly to stand at $91.08, down 97 cents on Thursday's closing level.

Brent North Sea crude for April reached a six-week low at $110.06 a barrel. Later, approaching midday in London, Brent traded at $110.55 a barrel, down 83 cents compared with Thursday.

"There is no fundamental justification for the price slide on the oil market, which appears to be sentiment-driven," said Commerzbank analyst Carsten Fritsch.

"True, the Chinese Purchasing Managers' Index fell in February to 50.1 points and thus only just remains in expansive territory.

"This does not necessarily point to weaker oil demand from China, however."

Market concerns were meanwhile mounting over the looming $85-billion in indiscriminate, across-the-board cuts known as the sequester, which are due to kick in later on Friday in the United States.

The US is the world's biggest consumer of crude oil, while China is the largest overall energy user.

burs-bcp/rfj/arp

http://www.globalpost.com/dispatch/news/afp/130301/oil-prices-drop-us-spending-cuts-kick