SINGAPORE, Mar 1: Oil prices eased in Asia today as revised fourth-quarter US economic growth disappointed, while dealers eyed huge federal spending cuts due to take effect, analysts said.
New York’s main contract, light sweet crude for delivery in April, shed 45 cents to USD 91.60 a barrel and Brent North Sea crude for April delivery slid 43 cents to USD 110.95.
“Oil suffered from the lower-than-expected US fourth-quarter GDP,” said Jason Hughes, head of premium client management for IG Markets Singapore.
Data Thursday showed growth in world’s largest economy and oil consumer came in at 0.1 per cent in October-December, better than the initial estimate of a 0.1 per cent contraction but lower than expectations of 0.5 per cent growth.
The slowdown reflected sharp falls in inventory building and federal government spending ahead of the January 1 “fiscal cliff” of tax hikes and huge spending cuts.
However, while the tax hikes were addressed, dealing with the spending issue was put back to March 1, and with no deal reached between lawmakers to put off the “sequester”, those cuts are due to kick in later today.
The lack of action means federal programmes in every agency including the military will suffer reductions.
DBS Group Research stated in a report: “For the moment, it appears that the sequester is coming, growth forecasts need to be pared back.” He added that the huge budget cuts “won’t be good for the unemployment rate”. (AGENCIES)
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