(Refiles to clarify China outlook in second paragraph)
* Brent holds onto gains, supported by financial markets
* BP spill impact on long-term prices so far limited
* Coming Up: U.S. ECRI weekly index; 1430 GMT
* For a technical view, click: []
(Adds China outlook, Japan economic assessment, updates
prices)
By Alejandro Barbajosa
SINGAPORE, June 18 (Reuters) - U.S. crude futures extended
losses on Friday as sluggish economic indicators raised doubts
about the sustainability of a recent acceleration in demand
growth by top oil consumer the United States.
Investors also focused on China, the No. 2 oil consumer,
where economic growth is expected to slow in the second half of
this year and double-digit growth for the full year seems
unlikely, central bank adviser Xia Bin said on Friday.
[]
Jobless claims in the U.S. unexpectedly increased last week
as the manufacturing, construction and education sectors shed
workers, a report showed on Thursday. []
Factory activity growth braked to its slowest pace in 10
months in the U.S. Mid-Atlantic region in June, raising
concerns that an anemic U.S. economic recovery is faltering.
Front-month West Texas Intermediate (WTI) crude futures
<CLc1> fell for a second day, shedding 57 cents to $76.22 at
0644 GMT on the New York Mercantile Exchange (NYMEX).
That is 13 percent lower than an early-May 19-month peak
above $87, although prices were headed for a second straight
week of gains, having recovered 18 percent from below $65 on
May 20.
"There is still an element of caution," said David Moore,
an analyst at the Commonwealth Bank of Australia.
"U.S. economic data is quite uneven and that's raised
doubts about the robustness of the economic recovery.
Fundamentally, the market is not tight. Inventories are high
and there is surplus capacity," Moore said.
But ICE Brent futures weathered the weak U.S. economic
statistics better, supported by easing concern about Spain's
sovereign debt woes. August Brent <LCOc1> slipped 21 cents on
Friday to $78.47 after rising on Thursday.
Spain's Treasury does not need to sell any more bonds to
deal with a 24 billion euro ($29.43 billion) bout of debt
repayments in July, an economy ministry source said on
Thursday.
Japanese stocks posted their biggest weekly rise in three
months after the government on Friday upgraded its economic
assessment for the first time in three months. []
U.S. stocks rose in a late rally on Thursday, while
European shares and the euro gained on reassuring demand for
Spanish government bonds.
RISING DEMAND, INVENTORIES
Overall oil product demand in the U.S. advanced by 1.9
percent in the past four weeks from a year earlier, the Energy
Information Administration said on Wednesday. Distillate use
jumped almost 14 percent in the same period.
But brimming crude stockpiles at the Cushing, Oklahoma,
pricing point for WTI, which rose 200,000 barrels to 37.6
million barrels last week according to the EIA, put additional
pressure on U.S. crude prices relative to European benchmark
Brent, analysts including Moore said.
Comparing August contracts, WTI was trading about 90 cents
lower than Brent on Friday. The front-month July WTI contract
is likely to behave more erratically as it nears expiry on June
22.
"Often these things occur when there are high levels of
liquidity at Cushing," Moore said. "WTI expiry is getting close
and you normally get some changes in positions."
U.S. lawmakers accused BP <BP.L><BP.N> Chief Executive Tony
Hayward of evasion and ducking responsibility for the worst oil
spill in U.S. history when he appeared before them on Thursday
to answer charges his company cut corners on its blown-out Gulf
of Mexico well. []
The U.S. has banned deepwater drilling for six months,
raising some concern that oil production growth in the Gulf
will slow. But the U.S. may also introduce legislation to curb
fuel consumption as response to the environmental disaster
caused by the spill.
Prices of long-dated WTI, including contracts for delivery
in December 2018, the farthest available, have remained
relatively steady around $95 since BP's Deepwater Horizon
explosion on April 20. In the meantime, the front of the
forward curve has declined from almost $82 to less than $78.
For a graphic comparing the U.S. forward curve before and
after the spill:
http://graphics.thomsonreuters.com/10/CMD_CRDFWD0610.gif
"It's always the case that the longer-dated prices are more
stable that then short term, because they are affected by
long-term expectations," Moore said.
"In ten years time, we are not necessarily assuming that
cyclic conditions are going to prevail. I don't think it's just
related to the BP oil spill."
(Editing by Ed Lane)
(alejandro.barbajosa@thomsonreuters.com; + 65 6870 3958;
Reuters messaging:
alejandro.barbajosa.thomsonreuters.com@reuters.net))
