Brent oil with a 1-month record slide (updated)

Brent oil dropped on Wednesday by $1.80, its biggest fall since May 1. Oil prices fell to nearly $101 per barrel today amid disappointing U.S. GDP growth data. Gross Domestic Product for the first quarter was revised downwards to 2.4% compared to the 2.5% growth forecast. Initial jobless claims were more than forecast and equaled 354 000, above the expectations of declining by 4 000 to 340 000. Prices were initially pressured by concerns of lower global demand and Chinese economic slowdown.

“Given the weak demand and over-supply, the pressure is definitely on the downside and that will continue until we see some evidence of strong economic growth,” said Michael Hewson, analyst at CMC Markets.

“We may see some retracement in prices, towards $103 or mid-$103 for Brent,” said Ryoma Furumi for Reuters, a commodity sales manager at Newedge in Tokyo. “But the market will keep a close eye on movements in the forex and equity markets.”

A report by the American Petroleum Institute yesterday showed gasoline inventories in the U.S. rose 1,9 million barrels, compared to forecasts of a 100 000 barrels increase. Distillate products rose by 3,1 million barrels, way above the expectations for a lack of volume change. After the settlement on Wednesday, API’s report showed U.S. crude inventories surprisingly rose by 4.4 million barrels, much higher than Reuters’ expectations of a 400 000 barrels decrease.

“If official data from the EIA is similar to the API data, we could see further sell-offs in U.S. oil markets,” ANZ analysts said in a note for Reuters. The Energy Information Administration is scheduled to release its Crude Oil Reserves report today.

Oil traders are also tracking news about OPECs meeting in Vienna and Chinas official PMI (Purchasing Managers Index), due later in the week. Most analysts predict the Organization of the Petroleum Exporting Countries will not change its production pace. Ali al-Naimi, oil minister for Saudi Arabia, said that current conditions are “the best environment for the market” and that “demand is great”.