Crude oil falls on weak outlook for economic growth

Crude was down in Asian trade today as worries over Spain and a slowing Chinese economy highlighted a weak global economic outlook, analysts said.

New York’s main contract, light sweet crude for delivery in November, shed 20 cents to $87.94 a barrel and Brent North Sea crude slipped three cents to $108.14.

“Crude oil prices dipped slightly on the weak outlook for economic growth,” said Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at Ernst and Young.

“This past week, European attention has been focused on Spain’s problems,” he said, adding that in Asia markets were worried about signs of an economic slowdown in China, the world’s biggest energy consumer.

Traders were watching Spain for hints on whether it would ask for a Euro Zone bailout soon, after Catalonia President Artur Mas had yesterday said the move was unavoidable and Madrid should ask for it without a long delay.

His words flew in the face of Spanish Prime Minister Mariano Rajoy’s studious refusal to say whether the Euro Zone’s fourth largest economy needs rescuing, insisting instead on the need to study the matter.

The Asian Development Bank had yesterday slashed its growth estimates for Asia’s emerging economies to the lowest level since 2009, citing a slowdown in powerhouses China and India.

It forecast China’s gross domestic product would expand 7.7 per cent this year before bouncing back to 8.1 per cent in 2013 but still well below the 9.3 per cent achieved last year.

India would see GDP growth slow to 5.6 per cent in 2012 before picking up to 6.7 per cent next year.

The bank also warned of significant risks caused by the effects of the European debt crisis and continued weakness in the United States, both of which are major export markets.