Singapore: Oil edged up on Friday, supported by solid industrial growth in China, after falling for a seventh straight session a day earlier on concerns over global oversupply, dipping below $70 for the first time in two months.
Signs that the US economy is on a steady growth track also offered some relief to oil even though the dollar held firm.
US crude for January delivery rose 41 cents to $70.95 a barrel by 0352 GMT, after touching an intraday low of $69.81 on Thursday. Over the past seven sessions, front month crude has sunk by almost $8, or about 10%, the biggest loss for the front month since July.
London Brent crude gained 37 cents to $72.23.
Some analysts said the sharp drop in prices reflected growing pessimism about a potential recovery, but others pointed to support from Asia.
“The current market is too pessimistic,” said Sumisho Sano, general manager for Research and SCM Securities in Tokyo. “The fundamentals are not so good in the United States, but China and Asia are not so bad, driven by industrial demand in the region.”
He expected oil prices to hold firm within the $65 to $80 range, down from the previous $75-80.
While US distillates stocks are abundant, Sano pointed to forecasts for falling temperatures in the world’s largest energy consumer to help ease bulging stockpiles, while pushing natural gas prices higher.
Nymex natural gas futures jumped 8% on Thursday, backed by cold Northeast and Midwest weather forecasts and a government report showing an unexpectedly-large weekly inventory decline.
AccuWeather.com expects temperatures in the Northeast, the key heating oil market, to average below normal for the next 10 days, while the National Weather Service called for below-normal temperatures for the eastern half including Texas, with seasonal or above seasonal seen for the rest of the United States.
China’s November industrial output growth surged to its strongest since June 2007, underscoring the economy’s robust recovery from the global downturn in response to massive fiscal and monetary stimulus, and analysts expected the trend to continue in coming months.
Refining rates in the world’s second-largest oil user also posted a record high in November, up 21% from a year earlier to 8.12 million barrels per day (bpd), signalling recovering demand.
But strong production also led to a build-up in fuel inventories in China’s two oil majors last month. Also while oil product exports rose, imports fell last month.
Data from the US was mixed. In the United States, while the number of workers filing new claims for jobless benefits rose more than expected last week, continuing claims fell, the Labor Department said.
US exports of goods and services hit their highest level since November 2008, narrowing the trade gap as the U.S. dollar helped boost exports, the Commerce Department said.
The dollar held steady on Friday, up 0.09% against a basket of major currencies, after the upbeat Chinese data and some improvement in US figures.