London: Oil rose towards $49 a barrel on Wednesday, partly in response to expectations of a recovery in economic growth this year in China, the world’s second biggest energy consumer.
US crude for June delivery rose 20 cents to $48.75 a barrel at 4:00pm, off a session low of $48.02.
London Brent crude rose 19 cents to $50.01 a barrel.
China’s central bank has predicted a recovery in economic growth this year, despite its gross domestic product slowing in the first quarter to 6.1% from a year earlier, the lowest rate on record.
Goldman Sachs has raised its forecast for China GDP growth this year to 8.3% from 6%.
Despite optimism over China’s outlook, demand for oil remains weak, illustrated by latest import data from Japan and South Korea.
“Arguably the biggest uncertainty in the oil market at the moment is the economy,” Lawrence Eagles, oil analyst at JP Morgan said in a research note.
“But even assuming a tentative second half 2009 recovery, some of the latest bleak demand data suggest that without a further OPEC cut, we may not see a significant stock draw until 4Q09.”
The International Monetary Fund looks set to cut its global economic forecasts in the coming week.
“The forecast that we will present this week will be worse than the previous one,” Dominique Strausse-Kahn, the IMF’s managing director told Germany’s Handelsblatt in an interview.
Oil has fallen around $100 a barrel since a record above $147 hit in July last year, but has risen more than 40% since mid-February, partly because of signs of compliance by Opec members over agreed supply cuts.
Since then, it has traded in a narrow band, with few convincing signs of a sustained demand recovery.
“At $45, it’s fairly easy to make a long position. So it is a support level. On the other hand, at the moment nobody wants to buy at $50,” said Ken Hasegawa, commodity sales manager with broker Newedge in Tokyo.
Traders will be watching the EIA oil inventory data due later in the day.
Analysts polled by Reuters predict US crude inventories will have risen last week for the seventh time in a row, with the stockpiles seen at their highest in nearly 19 years.
Data from the American Petroleum Institute on Tuesday showed US crude oil stocks fell unexpectedly by 1 million barrels last week to 370.2 million barrels.