Submitted by Fox First at Ten on July 10th
By PABLO GORONDI
Associated Press
Oil slipped further below $86 a barrel Tuesday after weak Chinese trade figures suggested the economic slowdown in the world's second-largest crude consumer is deepening and the government in Norway ordered the end of a labor strike in the oil sector.
By early afternoon in Europe, benchmark oil for August delivery was down 14 cents at $85.85 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose $1.54 to settle at $85.99 on Monday in New York.
In London, Brent crude for August delivery was down 88 cents at $99.44 per barrel on the ICE Futures exchange.
China said Tuesday that June imports increased 6.3 percent, which was less than analyst forecasts and down by half from May's growth rate while export growth declined to 11.3 percent from 15.3 percent in May.
Waning growth in Chinese demand for crude and other commodities suggests global oil consumption might be weaker than previously thought. Crude has fallen from $106 in May amid signs that economic growth in U.S., Europe and China is flagging.
Traders will get more insight into the health of the Chinese economy when second-quarter gross domestic product is released Friday.
"The last couple of months' worth of macroeconomic headlines have fomented doubt about the prospects of robust global oil demand through the remainder of 2012," energy trader and consultant The Schork Group said in a report.
A resolution to a labor dispute in Norway also weighed on oil prices. Early Tuesday, the Norwegian government imposed compulsory arbitration in a disagreement over employee retirement benefits that could have forced the oil industry to prepare for a historic shutdown in the North Sea.
"The intervention means that a major supply disruption is prevented," said Olivier Jakob of Petromatrix in Switzerland.
Norway's oil fields produce about 1.6 million barrels of oil a day.
"It may take from one to two days to get production started and Statoil expects to have the fields back in full production within a week," said a statement released by Norwegian oil and gas company Statoil.
Workers had been on strike since June 24, and the country's oil industry had been planning a lockout to begin at midnight Monday.
"Norway is a key contributor to the energy economy along the U.S. Atlantic seaboard," Schork said. "Therefore, the resolution of the labor dispute in Norway is significant."
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending July 6 is expected to show a draw of 1.5 million barrels in crude oil stocks and a build of 600,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration - the market benchmark - will be out on Wednesday.
In other energy trading, heating oil was down 3.5 cents at $2.71 per gallon and gasoline futures fell 3 cents to $2.73 per gallon. Natural gas gained 1 cent to $2.87 per 1,000 cubic feet.
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Alex Kennedy in Singapore contributed to this report.
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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