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 The sharp drop in exports stoked oil demand-growth worries as it
followed a series of factory surveys since the start of 2014 that
points to weakness in economic activity. Most risk assets, including
Asian shares and base metals, also fell due to the weak numbers.
Brent crude declined 34 cents to $108.66 a barrel by 0238 GMT,
snapping two straight days of gains. U.S. fell 14 cents to $102.44,
after touching a high of $102.82. It settled up $1.02 on Friday.
"Oil pulled back because of the latest data from China despite
continuing tensions over Ukraine," said Victor Shum, vice-president
of energy consultancy IHS Energy Insight. "The ongoing situation in
Ukraine will put a high floor on oil prices and lead to more
volatility."
Shum sees strong support for the U.S. benchmark at $100 a barrel and
Brent holding around its current trading range in the short term,
largely supported by geopolitical tensions.
Russian President Vladimir Putin defended breakaway moves by
pro-Russian leaders in Crimea, where Russian forces tightened their
grip on the Ukrainian Black Sea peninsula by seizing another border
post and a military airfield.
Germany's Angela Merkel delivered a rebuke to Putin, telling him
that a planned Moscow-backed referendum on whether Crimea should
join Russia was illegal and violated Ukraine's constitution.
UKRAINE, CHINA
Gazprom issued a warning on Friday that it could stop shipping gas
to Ukraine over unpaid bills, increasing pressure on the new
government in Kiev and its supporters in Europe. Gazprom had halted
gas supplies to Ukraine over unpaid bills in 2009, which led to
reductions in supplies of Russian gas to Europe during a cold
winter.
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"We will continue to see some back and forth between Russia and the
West over Ukraine," said Shum. "That will keep geopolitical tensions
high and support oil."
For now, oil is under pressure as combined Chinese exports in
January and February fell 1.6 percent from the same period a year
earlier, versus a 7.9 percent full-year rise in 2013, bolstering
concerns that the data wasn't weak due to possible distortions
caused by the long Lunar New Year holiday, which began on Jan. 31
and covered early February.
Prices were under pressure even though China's total crude oil
imports in the first two months of the year rose 11.5 percent from a
year earlier to 51.21 million tonnes, as investors saw the rise
partly as a result of build up in commercial crude inventories.
(Editing by Muralikumar Anantharaman)
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