Oil Declines for Fourth Day After China Raises Interest Rates - Bloomberg

Oil fell for a fourth day as China raised key interest rates for the third time since mid-October, sparking concern that fuel demand will be curtailed in the world’s biggest energy-consuming country.

Futures dropped 0.6 percent as the People’s Bank of China boosted the one-year lending rate to 6.06 percent from 5.81 percent to curb inflation. Crude also declined as political tension in Egypt eased, and before a report tomorrow that may show U.S. crude inventories increased for a fourth week.

“It’s all about China right now,” said Tom Bentz, a broker with BNP Paribas Commodity Futures in New York. “Climbing Chinese interest rates could slow the economy.”

Oil for March delivery slipped 54 cents to settle at $86.94 a barrel on the New York Mercantile Exchange. Futures have risen 21 percent in the past year.

Prices pared losses from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles decreased 558,000 barrels to 346 million. It was the first drop in five weeks. March oil fell 19 cents to $87.29 a barrel in electronic trading at 4:31 p.m.

Brent crude for March settlement gained 67 cents, or 0.7 percent, to $99.92 a barrel on the ICE Futures Europe exchange in London. Brent was a record $12.98 a barrel more expensive than Nymex crude, based on settlement prices.

China raised its rates as growth accelerated and inflation stayed above 4 percent. Consumer prices climbed 4.6 percent in December and the economy expanded 9.8 percent in the fourth quarter, faster than the pace in the previous three months. more ...