Singapore: Oil rose above $79 a barrel on Wednesday, after dipping a day earlier, as signs of robust economic growth in China offset mildly bearish US industry data showing surprise builds in crude and distillate stockpiles.
The dollar slipped but stayed above recent 15-month low against a basket of currencies as investors paused for breath after a spike in the euro and higher-yielders, while Japan’s benchmark Nikkei edged up 0.2% as the yen’s advance against the dollar limited gains.
Data released on Wednesday showed that industrial output growth in the world’s No. 2 oil user spurted to a 19-month high in the year to October, underlining the Chinese economy’s brisk recovery from the global downturn in response to massive fiscal and monetary stimulus.
The US market is closed on Wednesday for a national holiday, so traders will scour inventory data by the Energy Information Administration, due on Thursday, for further clues on the outlook for demand from the world’s top energy consumer.
A monthly report by producer group OPEC, due later in the day, could also offer clues on the outlook for global oil demand.
US crude for December delivery rose 11 cents to $79.16 a barrel by 0220 GMT, after settling down 38 cents at $79.05 on Tuesday. London Brent crude was up 11 cents to $77.61.
Oil prices have risen about 77% so far this year, but are still 46% off their high of more than $147 a barrel struck in July last year.
“The Chinese economic data will be a significant near-term boost for the market. The data provides evidence of the strength of the Chinese economy,” said David Moore, commodity strategist with the Commonwealth Bank of Australia.
“Oil’s underlying tone remains firm. We do not think that the fundamentals justify prices at such levels, given high inventories and with demand still weak, but you can’t argue with the market.”
The pace of demand recovery in the United States remains patchy. US crude stocks rose 1.2 million barrels last week, higher than analyst projections for a 600,000-barrel build, as imports rebounded, weekly inventory data from the American Petroleum Institute (API) showed on Tuesday.
Inventories of distillates, which include heating oil and diesel, posted a surprise gain of 640,000 barrels, compared with analyst forecasts of a fall of 700,000 barrels due to colder weather in the northeastern United States.
Oil fell on Tuesday after Ida, the first real storm threat of the 2009 season, was downgraded from a hurricane on Monday, and as companies began restoring their Gulf of Mexico operations.
But the US Minerals Management Service said more than 43% of oil output and nearly 28% of natural gas output remained shut late on Tuesday.