Oil prices languished under $90 a barrel Friday in Asia after a big fall the day before on increased expectations that China, the world’s biggest energy consumer, will take more aggressive steps to slow its torrid economic growth.
Benchmark crude for March delivery was up 14 cents at $89.73 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract lost $2.22 to settle at $89.59 on Thursday.
Oil and other commodities have taken a hit from news that China’s economy defied expectations to speed up in the fourth quarter while inflation remained elevated.
Traders speculated that means China’s government will try further measures to control cost of living increases. China has had a robust appetite for commodities from oil to soybeans as its economy has boomed in the past year.
Investors worry that “China may now be more eager to rein in inflation rather than to promote growth,” energy consultants Cameron Hanover said in a report.
But it could be good news for drivers if the fall in the oil price is sustained and translates into lower prices at the gasoline pump.
Oil prices were also restrained by the Energy Department’s weekly report that showed growing U.S. stockpiles of oil, gasoline and distillates, which include heating oil and diesel fuel. All are higher than the five-year average, an indication that energy demand remains tepid.
The Energy Information Administration said natural gas supplies fell more than expected last week, as very cold weather covered much the country. But supplies are still about 2 percent above the five-year average.
In other Nymex trading in February contracts, heating oil was down 0.4 cent at $2.619 a gallon while gasoline rose 0.5 cent to $2.428 a gallon. Natural gas added 1.7 cents to $4.71 per 1,000 cubic feet.
In London, Brent crude declined 8 cents to $96.50 a barrel on the ICE futures exchange.