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Oil rises above $71 after record Chinese oil data

Oil rises above $71 after record Chinese oil data
AP
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First Published: Tue, Aug 11 2009. 01 27 PM IST
Updated: Tue, Aug 11 2009. 01 27 PM IST
Singapore: Oil rose above $71 on Tuesday, ending a three-day losing streak as record Chinese oil imports and refinery production helped offset mixed economic data, while traders anticipated key reports on the state of global demand.
China reported below-forecast growth in factory output and investment on Tuesday, but a further pick-up in exports and higher than expected retail sales, underlining why senior officials keep reminding markets that recovery in the world’s third-largest economy is not yet on solid ground.
But oil data showed a brighter picture for the world’s No. 2 consumer, with imports surging 42% on the year in July to a record 4.62 million barrels per day as refiners boosted exports and cashed in on retail price hikes in June.
“We believe the July (crude imports) figure is not a fluke,” said analyst Gordon Kwan of Mirae Asset Securties. “The record number is driven by strong fuel demand and commercial restocking.”
US light crude for September delivery rose 46 cents to $71.06 a barrel by 10:00pm, having fallen 33 cents on Monday when it tracked Wall Street losses. Oil has more than doubled from this winter’s low $30s but high inventories worldwide have kept prices in check as they suggest still weak demand.
London Brent crude rose 34 cents to $73.84 a barrel.
With Tuesday’s deluge of China data out of the way, traders will now shift their focus to the pace of demand recovery in harder-hit Western economies, with a slightly brighter economic outlook possibly prompting the EIA to again raise its world oil demand forecasts when it releases its August report at 9:30pm.
In its July outlook, the EIA raised its 2009 global oil demand projection to 83.85 million barrels per day from the previous forecast of 83.68 million -- still well below 2008 levels of 85.41 million bpd.
Opec will also release its monthly oil report on Tuesday, followed by the International Energy Agency on Wednesday.
The next set of weekly US oil stock data is expected to show steep 1.5 million barrels drawdown in US gasoline stocks, deeper than the previous week’s 200,000 barrels fall, but a bearish 800,000-barrels rise in crude stocks on higher imports and lower refinery utilization.
The American Petroleum Institute will release a first set of data at 2:00am (IST), to be followed on Wednesday by data from the Energy Information Administration (EIA).
Traders will also watch the policy-setting Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday for any signs of a plan to exit its ultra-loose monetary policy, although it is not expected to change interest rates.
The worst US recession since the Great Depression will probably end in the third quarter, but uncertainty exists over the speed and duration of the economic recovery, according to the most recent survey of private economists.
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First Published: Tue, Aug 11 2009. 01 27 PM IST