Oil traded near a three-day low in New York amid concern of slowing consumption in China after the country lowered its economic growth goal.

Futures were little changed after earlier rebounding from the first weekly loss in four. China, the world’s second-largest oil user, will aim for economic growth of 7.5 percent this year, the lowest goal since 2004, Premier Wen Jiabao said today. Israeli Prime Minister Benjamin Netanyahuand U.S. President Barack Obama will meet today to discuss confronting Iran’s nuclear program, even as Obama asked Israel to help dial back “too much loose talk of war.”

 

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March 5 (Bloomberg) -- Dominic Schnider, global head of commodity research at UBS AG’s wealth management unit, talks about crude oil prices and demand. Oil traded near a three-day low in New York before Israeli Prime Minister Benjamin Netanyahu meets President Barack Obama for talks on Iran’s nuclear program. Schnider speaks from Singapore with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

“You’re going to see lower consumption in the developed world, and even from emerging markets you’ll see less incremental consumption,” said Dominic Schnider, head of commodity research at UBS AG wealth management, in a Bloomberg Television interview from Singapore. “I think this warrants a lower price, especially as some of these Iranian supply risk concerns start to fade.” Schnider sees Brent crude falling to $110 a barrel in the short-term.

Oil for April delivery was at $106.65 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 4:02 p.m. Singapore time. The contract earlier gained as much as 59 cents to $107.29. It fell 2 percent to $106.70 on March 2, the lowest since Feb. 28. Prices slipped 2.8 percent last week and are 1.4 percent higher the past year.

Brent oil for April settlement was at $123.40 a barrel, down 25 cents, on the London-based ICE Futures Europe exchange.

Brent’s premium to West Texas Intermediate narrowed after a fatal vehicle collision and fire at a pumping station prompted Enbridge to close the pipeline near Chicago. The price difference was at $16.74, compared with $16.95 on March 2. It reached a record of $27.88 on Oct. 14.

Iran Tension

Asian stocks fell the most in two weeks after China announced the economic growth target. The MSCI Asia Pacific Index dropped 0.9 percent as of 4:15 p.m. in Tokyo. Euro Stoxx 50 Index futures lost 0.6 percent and Standard & Poor’s 500 Index futures slipped 0.3 percent.

The U.S. won’t hesitate to use military force against Iran if necessary, while there is still time for diplomacy and sanctions to work, Obama told a conference of the American Israel Public Affairs Committee yesterday. Prices slid the most this year on March 2 after he said in an interview with the Atlantic magazine that a pre-emptive strike might generate “sympathy” for the Persian Gulf country.

“You can always gauge how nervous the market is” after news of a pipeline closure, saidJonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “That’s the jittery nature of the market at the moment. Iran is still a wildcard.”

Pipeline Schedule

Iran may shut the Strait of Hormuz if the country is threatened, Masoud Jazayeri, the country’s deputy chief of military staff, said in an interview, according to Iraq’s Biladi television. The waterway is a transit route for a fifth of the world’s oil.

Enbridge was forced to shut lines 14/64 and 6A after two people were killed and several others injured in the crash that ignited the fire at a pumping station near New Lenox, Illinois, about 36 miles (58 kilometers) southwest of Chicago.

The 6A line, with a capacity of 670,000 barrels a day, has since resumed, Calgary-based Enbridge said. The 14/64 line can carry 320,000 barrels a day. Line 14 is forecast to be shut until the evening of March 7 and 64 until the afternoon of March 8, Lorraine Little, a Superior-based spokeswoman for Enbridge, said in an e-mail.

New York crude is also rebounding as futures remain within an upward-sloping trend channel on the daily chart going back about a month, according to data compiled by Bloomberg. The bottom of this channel, representing technical support, is around $106.40 a barrel today. Buy orders tend to be clustered near chart-support levels.

Hedge funds increased net-long positions in crude oil by 5 percent to 272,032 in the seven days ended Feb. 28, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Wagers gained a fourth week to the highest since May 3, the report showed.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore atakwiatkowsk2@bloomberg.net

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