Brent crude rose towards 109 dollars a barrel on Wednesday after upbeat Chinese trade data raised optimism of continued growth in oil demand.
China’s exports beat expectations, rising 10.6 per cent in January from a year earlier, while imports jumped 10 per cent, signaling a reversal of the recent economic slowdown.
Crude oil imports in China rose 11.9 per cent in January from a year earlier to a record 28.16 million tonnes or 6.63 million barrels per day (bpd).
“The strong data underpins strength in oil markets and across the whole commodity board,” said Mark Keenan, head of commodities research in Asia at Societe Generale.
“The data is so surprising that there’s an element of checking whether it’s in fact correct at the moment.”
Brent crude for March delivery was four cents higher at 108.72 dollars, after settling up five cents.
U.S. crude was up 38 cents at 100.32 dollars a barrel after closing 12 cents lower.
The U.S. contract was buoyed by data from the American Petroleum Institute (API).
The data showed that crude stocks at the key U.S. delivery hub in Cushing, Oklahoma, fell by 2.5 million barrels in the week to Feb. 7.
Expectations of increased demand due to cold weather in the U.S., especially for distillates, also offered support.
Distillates, including heating oil and diesel, fell by 1.5 million barrels last week, the API data showed.
U.S. crude inventories rose by 2.1 million barrels to 362.9 million, the API data showed, although this was lower than analysts’ expectations.
“Oil markets had a muted reaction to U.S. Federal Reserve Chair Janet Yellen’s comments on Tuesday that the central bank will stick to a measured tapering of stimulus.
“The comments would likely support investor sentiment toward risky assets such as oil, Keenan said.
Oil prices were boosted by the EIA revising its world oil demand forecast for 2014 to 1.26 million barrels per day (bpd), 50,000 bpd higher than a its earlier forecast.
The agency also reduces 2014 forecast for U.S. crude oil production by 100,000 barrels per day (bpd) to 8.4 million bpd and by 100,000 bpd to 9.2 million bpd for 2015.
“Collectively, the recent news provide a reasonable stable foundation for higher oil prices going forward,” said Keenan.
Progress in talks between world powers and Iran over the country’s nuclear programme could also weigh on prices.
Tough international sanctions over the past two years have cut Iran’s oil exports in half.
Meanwhile, President Barack Obama on Tuesday warned of tough action against companies eyeing business with Iran.
He said that the U.S. would come down like a “ton of bricks” on those that violated sanctions against Tehran. (Reuters/NAN)
© anu for Royal Times of Nigeria Newspaper, 2014. |
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