LONDON (Reuters) - Oil steadied around $124 a barrel on Tuesday, weighed by a forecast for slower growth in world demand this year from the International Energy Agency.
A decline in China’s oil imports in April, the first year-on-year drop in 18 months, also raised questions over demand. China is the world’s second-largest oil consumer after the United States.
U.S. crude was down 6 cents to $124.17 a barrel by 3:20 p.m., after falling as low as $123.10. On Monday, it hit a record of $126.40. London Brent crude was off 42 cents to $122.49.
“Although I still think we have more upside potential, perhaps all the way up to $130, I think the market is getting ready for a correction,” said Nauman Barakat of Macquarie Futures USA.
Record-high oil prices will slow global oil demand growth this year to 1.03 million barrels per day (bpd), said the IEA, 230,000 bpd less than its previous forecast.
But the adviser to 27 industrialised countries also said demand growth from emerging countries led by China and the Middle East remained strong.
Investors wondered how long demand could hold up given the sharp rise in oil prices, which first hit $100 in January.
“It’s not the absolute level, it’s the rate,” said Evan Smith of Texas-based fund manager U.S. Global Investors.
A too-rapid rise in prices is “what’s going to cause oil prices to hold back. It’s going to be demand destructive.”
China’s April crude oil imports fell by 3.9 percent from a year ago to 3.47 million bpd, and were also down from the record of 4.07 million bpd in March, official Chinese data showed.
The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up sixfold since 2002.
Weekly U.S. inventory data on Wednesday will provide further direction to the market after an unexpected fall in distillates stocks, which include heating oil and diesel fuel, pushed prices higher last week.
U.S. crude inventories are expected to have risen for a fourth straight week, while products stocks would also rise, helped by an increase in refinery utilisation, a Reuters poll of analysts found.
Additional reporting by Maryelle Demongeot in Singapore and Barbara Lewis in London