SINGAPORE/LONDON: Brent crude prices edged up above $106.50 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 outlook in the world's second-largest economy offset previous downward pressure on oil prices from easing concerns about supply disruptions in North Africa, the Middle East and Ukraine, which had pulled Brent down more than 8 percent since mid-June.
Brent was trading below $106 prior to the release of China's economic data but quickly jumped higher.
The North Sea benchmark was at $106.55 by 0820 GMT, after hitting an intraday low of $104.39 on Tuesday, the weakest price in more than three months. The August contract expires on Wednesday.
U.S. crude gained 68 cents to $100.64 a barrel. The contract fell as low as $99.01 in the previous session to break the 200-day moving average of $99.92, a key technical indicator closely watched by traders.
China's economy grew by 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, 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.
U.S. CRUDE STOCKS DOWN
In the United States, prices rose on the expectation of strong industrial production and the publication of official oil inventory figures, to be released later on Wednesday.
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..
U.S. 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 U.S. government's Energy Information Administration (EIA) is due later in the day.
Investors were also eyeing Libya, where oil output had risen to 588,000 bpd, even as militia groups continued to fight among themselves for control of Tripoli's international airport in the country's worst violence in months.
In Europe, the United States and the European Union could impose new sanctions against Russia after Ukraine suggested Moscow was involved in an air strike that killed 11 people.
FALLING SPREADS
Wednesday's slight price rises ended oil's longest losing streak since 2010 as easing geopolitical tensions in Iraq and Libya soothed worries over oil supplies.
Despite Wednesday's gains, front-month crude prices have shed almost 10 percent since mid-June, while prices for next year have remained relatively firm, meaning the oil curve has flattened.
The price spread between August 2014 and August 2015 Brent collapsed by over 88 percent during the past month to under $0.8 per barrel, its lowest level since 2011.
"You can effectively take a long spreads position here at the most advantageous levels in three years," brokerage Marex Spectron said on Wednesday in a research note.
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