Oil Down Slightly, China Inflation Worries Prevail


Brent crude is down slightly in early morning trade Thursday, as worries about inflation in China increased concerns about global economic growth prospects.

China's National Bureau of Statistics reported that inflationary pressure reached a 16-month high, as consumer prices rose 2.7% in February from a year ago, slightly above what most Wall Street analysts had been expecting.

At 0745 ET, Brent crude is down 0.1% at $80.43 barrel, while light sweet crude is up 0.1% at $82.20 a barrel, and natural gas is down 0.5% at $4.53 a million British thermal units.

Industrial production in China, meanwhile, rose 20.7 percent dudring the first two months of this year, which is the biggest increase for that period in over five years. Rising inflationary pressure, coupled with a rapid rise in production, is increasing market speculation that the Chinese authorities will tighten monetary policy sooner rather than later. Higher interest rates in China, in turn, is expected to be a blow to the global economy as China has been a key driving force behind the world's still-shaky economic recovery, compensating for lackluster growth in the United States and Europe, as well as Japan.

On the corporate front, British oil giant BP Plc ( BP ) will pay $7 billion Oklahoma's Devon Energy Corp.'s ( DVN ) assets in Brazil, the Gulf of Mexico, and Azerbaijan. Devon, in turn, will buy a 50% stake in BP's Kirby oil sands project in Canada for $500 million and meet $150 million of BP's capital costs. Through the acquisition, BP will be able to have access to deepwater exploration in eight blocks in the Campos and Camumu-Almada Basins as well as two onshore licenses in the Parnaiba Basin.

Meanwhile, British chemical group Ineos Group Holdings Plc shut down a diesel unit at its Lavera oil refinery for maintenance. The hydrocracker at its French refinery will undergo four weeks of maintenance, but will be back in operation by the end of March, Ineos said. Its Grangemouth refinery in Scotland will be shutting down as well for about 45 days for maintenance.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright (C) 2014 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

Referenced Stocks: BP , DVN

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