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SINGAPORE: Oil prices edged higher in Asian trade Wednesday after heavy losses in New York but sentiment was dampened by renewed jitters over European debt and weak economic data from China, analysts said.
New York's main contract, West Texas Intermediate crude for delivery in May was up 26 cents to $101.26 per barrel while Brent North Sea crude for May gained 24 cents to $120.12 in morning trade.
WTI had fallen $1.44 in New York while Brent had dived $2.79.
Nervousness over Europe's debt crisis returned to the market as yields on Spanish debt jumped amid rising doubt over its ability to stabilise its finances, analysts said.
“A sharp rise in Spanish and other peripheral European sovereign debt yields dented investor confidence,” said Justin Harper, market strategist at IG Markets Singapore.
“Spain's 10-year yields are trading just below 6.0 per cent, which isn't far off the 6.7 per cent peak they hit last November as panic was rife over a eurozone collapse.” Harper and other analysts said weak economic data from China was also keeping a lid on gains.
“Energy markets were hit hard by China's slowing imports, as it is the world's second biggest crude oil consumer,” Harper said.
Phillip Futures said the March trade data “showed China's import growth fell below expectations, indicating tepid first-quarter demand”.
China, the world's largest energy consumer, on Tuesday said it recorded a trade surplus of $5.35 billion for March, reversing a trade deficit of $31.48 billion for February.
However, it also said exports rose a relatively weak 8.9 per cent, while imports were up just 5.3 percent, suggesting flagging domestic consumption in the country of 1.3 billion people.
The weak import figures are also a cause for concern for the Chinese government, which is looking to inject domestic oriented growth into the country's hugely export dependent economy.
A gloomy outlook on global oil demand growth by the the US Energy Information Administration in its latest report was also weighing on prices, according to Phillip Futures.
“On the demand side, if the pace of global economic growth fails to recover in countries belonging to the OECD, or if economic growth slows in non OECD countries, prices could be lower,” the EIA said in its monthly report released on Tuesday.
