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Crude Falls to Lowest Level This Year as China Slows

West Texas Intermediate crude fell to the lowest level this year as China’s economic growth unexpectedly eased, raising concern that demand from the world’s second-biggest oil-consuming country will slow.

Prices dropped below $90 as China’s first-quarter gross domestic product gained 7.7 percent from a year earlier, the National Bureau of Statistics reported in Beijing. That’s less than the 8 percent forecast in a Bloomberg survey of economists and the 7.9 percent expansion in the fourth quarter. China’s oil use was the least in five months in March, the data showed. Commodities tumbled, with gold plunging the most in 33 years.

“We are seeing a selling frenzy right now, and the global macroeconomic picture is rather dim,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “You’ve got a lot of weight being placed on the bearish side of the oil market. It’s really hard to see where the growth is.”

WTI for May delivery decreased $2.58, or 2.8 percent, to settle at $88.71 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 24. Prices extended losses after floor trading closed, dropping as much as 4.5 percent to $87.20 in electronic trading. The volume of all futures traded was 69 percent above the 100-day average at 5:14 p.m.

Brent for May settlement, which expired today, fell $2.72, or 2.6 percent, to $100.39 a barrel on the London-based ICE Futures Europe exchange, the least since July 11. Volume was 28 percent above the 100-day average. The more actively traded June contract slid $2.41 to end the session at $100.63. The contract decreased as much as 3.8 percent to $99.12 after the settlement.

Commodities Drop

The Standard & Poor’s GSCI Index of 24 commodities plunged 2.3 percent to 608.83, the lowest level since July. Silver, gold and WTI oil led the decline. Gold futures slumped 9.3 percent in New York in the biggest drop for a most-active contract since March 17, 1980.

“China’s GDP is part of the reason that the market is selling off in general,” said Julius Walker, global energy markets strategist at UBS Securities LLC. Oil’s drop “is more related to the broad market fall.”

China’s first-quarter growth was lower than all except two of the 41 analyst estimates in the Bloomberg survey. They ranged from 7.5 percent to 8.3 percent. Chinese GDP expanded 7.8 percent in 2012, the least since 1999.

JPMorgan (JPM) today cut its 2013 growth forecast to 7.8 percent from 8.2 percent, while Royal Bank of Scotland Group Plc lowered its estimate to 7.8 percent from 8.4 percent.

Oil is “part of a wider wave of selling across a broad range of commodities after China reported weaker GDP growth for the first quarter than expected,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York, in an e-mail.

Chinese Demand

China used 9.76 million barrels of oil in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy, behind only the U.S. in terms of oil consumption.

China’s apparent oil demand in March grew 2.7 percent from a year earlier to 9.77 million barrels a day, according to statistics bureau data compiled by Bloomberg. That’s down from February’s 10.2 million and is the lowest level since October.

Slower economic growth “translates into weaker oil demand growth, but we think development there is still pretty energy intensive,” Walker said.

Oil also fell as manufacturing in the New York region expanded less than projected in April. The Federal Reserve Bank of New York’s general economic index dropped to 3.1 this month from 9.2 in March. Readings exceeding zero signal expansion in New York, northern New Jersey and southern Connecticut.

Gold Tumbles

Gold slumped below $1,400 an ounce, ending the session at $1,361.10 on the Comex in New York. After the settlement, the price touched $1,335.10, the least since Feb. 3, 2011. Estimated trading levels topped a previous record.

“Let’s not forget what’s happening in gold,” Schork said. “You could be seeing margin calls in gold and commodity funds offsetting these calls by liquidating some of their lengths in WTI.”

In Venezuela, the third-biggest oil producer in the Organization of Petroleum Exporting Countries, Nicolas Maduro was elected president. Maduro campaigned on a pledge to deepen 14 years of the late Hugo Chavez’s socialist revolution.

A Maduro presidency could see “a further degradation of the state oil company and the country’s oil prospects,” the International Energy Agency said in its monthly oil market report March 13.

Implied volatility for at-the-money WTI options expiring in June was 26.6 percent, up from 20.6 percent April 12.

Electronic trading volume on the Nymex was 791,616 contracts as of 5:14 p.m. It totaled 861,748 contracts on April 12, 48 percent above the three-month average and the most since Jan. 23. Open interest was a record 1.78 million contracts.

To contact the reporter on this story: Moming Zhou in New York at mzhou29@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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