SINGAPORE: Brent crude futures slipped towards $120 on Monday after weak growth numbers from China, the world's No. 2 oil consumer, and a surge in Spanish borrowing costs triggered worries about global economic growth and demand.
China's economy grew 8.1 percent in the first quarter from 8.9 percent in the previous quarter, weaker than expected and the slowest growth in nearly three years, raising fears that the downward drift will extend into the second quarter and dampen oil demand.
A stronger dollar and a jump in the cost of insuring Spanish debt against default to a record high on Friday renewed worries about the eurozone debt crisis, pressuring oil prices further.
Front-month Brent crude slipped 1.17 to $120.04 a barrel by 0311 GMT, after settling at $121.21 a barrel on Friday. US oil slipped 64 cents to $102.20 a barrel after settling at $102.83.
"The weaker than expected Chinese data appears to be the key driver of the market right now," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.
China's implied oil demand rose moderately in March over a year earlier, but stood at a five-month low on a daily basis, as refineries scaled back runs to the lowest level since October on maintenance and poor refining margins.
Investors were also worried after a survey in the US showed consumer sentiment had slipped in early April as higher gasoline prices hit household budgets.
The dollar index rose 0.26 percent on Monday. A stronger dollar makes the commodity more expensive for consumers using other currencies.
Oil prices were also under pressure after top oil exporter Saudi Arabia's Oil Minister Ali al-Naimi said on Friday that the country is determined to bring down high oil prices and is working with fellow OPEC members to accomplish that.
Naimi reiterated that there were no supply shortages in the global oil market and the kingdom stood ready to use its spare production capacity if necessary. (Reuters)