Oil slips on economic concerns despite upbeat data from China

• China’s economy grows 4.5% in the first quarter
• US interest rates and dollar strength are weighing
• Baghdad, KRG take step toward resuming oil exports from northern Iraq
• Coming soon: `I supply report at 2030 GMT

April 18 (Reuters) – Oil fell for a second day on Tuesday as optimistic Chinese economic data failed to divert focus from a possible hike in US interest rates and broader concerns about the growth outlook.

Crude oil prices have also come under pressure from the Iraqi federal government and Kurdistan Regional Government (KRG), which took a step towards resuming oil exports from Turkey’s north port of Ceyhan after they were halted last month.

Brent crude fell 28 cents, or 0.3%, to $84.48 a barrel by 0908 GMT, giving up early gains. US West Texas Intermediate lost 30 cents, or 0.4%, to $80.53.

“The next step may depend on global growth and whether the economy can weather the recent storm, particularly in the US, where tighter credit could weigh significantly on growth for the remainder of the year,” brokerage firm OANDA’s Craig Erlam said in reference on the outlook for the oil price.

Earlier in the session, oil had found support on numbers showing that China’s economy grew by a faster-than-expected 4.5% in the first quarter and that throughput at oil refineries rose to record levels in March.

“As of today, all systems are going out in China, much to the relief of those betting on higher oil prices,” said Stephen Brennock of oil brokerage PVM.

But the prospect of another hike in US interest rates, which has supported the US dollar, continued to weigh on sentiment. Traders expect the US Federal Reserve to hike rates by 25 basis points at its May meeting.

The dollar eased Tuesday after earlier gains. A stronger dollar makes commodities valued in US currency more expensive for buyers holding other currencies.

On Tuesday, the latest US inventory snapshot will come into focus. Analysts expect U.S. crude inventories to fall by about 2.5 million barrels and are also forecasting falls in gasoline and distillates.

The first of this week’s two reports from the American Petroleum Institute is due at 2030 GMT.

Reporting by Arathy Somasekhar; Editing by Sonali Paul

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