12 Aug 2008

Oil price falls on China crude import drop

8:40 am on 12 August 2008

Oil prices fell on Monday as a drop in crude imports by China outweighed concerns over supply disruptions stemming from the conflict between Russia and Georgia.

US crude settled down 75 US cents at $US114.45 a barrel, after touching a low of $US112.72. London Brent crude fell 66 US cents to $US112.67.

China's crude imports unexpectedly fell 7% in July to a seven-month low in the steepest monthly drop since January 2005, as refiners balked at soaring crude costs amid lagging domestic fuel prices.

The drop in Chinese imports added to wider concerns about demand. Consumption in the United States and other developed economies has fallen due to high fuel prices.

Rising demand from China and other developing economies sent oil on a six-year rally that drove prices up sevenfold to their peak above $US147 in July.

Additional buying support this year came from investors buying oil to hedge against inflation and the weak dollar.