Light sweet crude for February delivery declined 0.53 percent or 51 cents to $95.05 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours. Brent crude oil futures for the March delivery fell 0.32 percent or 36 cents to $111.53 a barrel on the ICE futures exchange in London.
Oil futures surged 2.2 percent last week as sentiment was buoyed following the release of the improved economic data in both the U.S. and China, the world’s largest and second-largest oil consuming nations.
Official data released Friday showed that Chinese economy expanded at a faster rate than expected in the fourth quarter of 2012, suggesting a revival in the economic growth momentum of the country. China's fourth Gross Domestic Product (GDP) came in at 7.9 percent on an annual basis, up from 7.4 percent growth reported in the third quarter and better than the analysts’ expectation of 7.8 percent.
The encouraging economic reports from the U.S. also helped oil touch the fourth month high last week. Housing starts climbed 12.1 percent to a seasonally adjusted annual rate of 954,000 units in December, the highest level since June 2008, while weekly jobless claims also declined to a five-year low.
However, a weaker-than-expected reading on the University of Michigan's consumer confidence survey for January slightly weighed on the sentiment. The preliminary index for January, which rates the relative level of current and future economic conditions, declined to 71.3 from a final December level of 72.9 and fell short of the analysts’ expectation of 75 levels.
Meanwhile, the International Energy Agency (IEA) Friday said that the oil market was suddenly looking much tighter than expected due the unexpected surge in Chinese oil demand and reduced seasonal supply from Saudi Arabia. However, the IEA cautioned that it is too early to declare a return to the bull market.
"The IEA may have said the market is tighter, but the over-riding fundamental feeling in the market is that crude oil is over supplied in 2013. Brent may trade in a range between $109 and $112 per barrel this week," Tony Nunan, an oil risk manager at Mitsubishi in Tokyo, told Reuters.
On Friday, light sweet crude for the February delivery gained 0.1 percent or 7 cents and settled at $95.56 a barrel on the New York Mercantile Exchange while Brent crude for the March delivery rose 0.8 percent or 79 cents to $111.89 a barrel.