SINGAPORE: Brent crude climbed above $106 a barrel on Wednesday as data from China showed its economy grew faster than expected in the second quarter and the country's implied oil demand rose to its highest since the beginning of last year.
The improving economic outlook in the world's second largest economy and No.2 oil consumer offset downward pressure on Brent from easing concerns about supply disruptions from violence in North Africa, the Middle East and Ukraine.
"Chinese economic data could be the catalyst to push Brent back up towards $108 a barrel," said Ben Le Brun, a market analyst at Sydney-based trader OptionsXpress.
Brent was trading below $106 a barrel prior to the release of China's economic data but quickly jumped higher.
Brent climbed 7 cents to $106.09 by 0410 GMT, after hitting an intraday low of $104.39 a barrel on Tuesday, the lowest in more than three months.
The August contract expires today. US crude gained 44 cents to $100.40 a barrel. The contract fell as low as $99.01 a barrel in the previous session to break the 200-day moving average of $99.92, a key technical indicator closely watched by traders.
The better-than-expected economic data from China is likely have a positive impact on oil prices for at least the next 24 hours, Le Brun added. China's economy grew 7.5 percent between April and June from a year ago, slightly above expectations and up from 7.4 percent in the first quarter, government data showed on Wednesday.
China's implied oil demand rose 2.6 percent compared with a year ago to 10.2 million barrels per day (bpd) in June, the highest since January 2013, according to Reuters calculations based on preliminary government data.
Other data released on Wednesday from Beijing showed factory output rose 9.2 percent last month compared with a year ago, beating expectations of a 9 percent increase.
Fixed asset investment rose 17.3 percent in the first six months with a year earlier, above forecasts for a 17.2 percent rise; retail sales rose 12.4 percent in June from a year ago, in line with analysts' predictions.
US CRUDE STOCKS DOWN
US crude prices firmed on the expectation of strong US economic data, including industrial production and official oil inventory figures, to be released later on Wednesday, Le Brun said.
Crude oil inventories fell 4.8 million barrels in the week ended July 11, data from industry group the American Petroleum Institute showed on Tuesday.
US commercial crude oil inventories were forecast to have fallen 2.1 million barrels last week, as refiners increased output, according to a Reuters poll of analysts.
The more closely watched weekly oil data from the US Department of Energy's Energy Information Administration (EIA) is due later on Wednesday.
Investors were also eyeing the situation in Libya where oil output had risen to 588,000 bpd, even as militia groups continued to fight amongst themselves for control of Tripoli's international airport in the country's worst violence in six months.
Europe could also impose fresh sanctions against Russia over the Ukraine crisis on Wednesday after Kiev suggested Russia was involved in an air strike on Tuesday that killed 11 people.
Iran and six world powers appeared likely to extend a July 20 deadline to reach agreement over Tehran's nuclear programme in exchange for a lifting of sanctions following talks on Tuesday.
Comments
Comments are closed for this article.