Brent Crude Oil sunk on Friday morning after Chinese data showed that inflation was rising faster than expected in the number two oil consuming country. The commodity traded at $111.71 on Friday morning.
On Thursday afternoon, Brent spiked after Saudi Arabia cut its oil production to combat the market's oversupply and decreased demand. The cut brought Saudi production levels to their lowest since May 2011.
Recent tension in the Middle East and supply interruptions in Yemen and Libya caused the Saudis to ramp up production and keep the market well supplied. Earlier in 2012, Saudi officials said they were committed to a price near $100 per barrel, however with the US adding to the supply and decreased global demand, many analysts believe the Saudis are making a preemptive move rather than waiting for prices to be weighed down.
Gains from Saudi Arabia's cut were quickly quashed when China released its inflation data on Friday morning. According to CBNC, China's consumer inflation rate hit a seven month high at 2.5 percent in December. The news was disappointing after positive trade data earlier in the week spurred the market.
Moving forward, investors will be eyeing the US and the latest talks regarding the country's debt crisis. After the fiscal cliff negotiations nearly missed the mark, many are wondering if a heated battle is in store for the US' approaching debt ceiling. Investors will also focus on insight into the global economy's health, as some are expecting growth in 2013 to exceed that of 2012.
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