Oil edges up toward $82 on China import surge
Singapore, March 10, 2010
Oil reversed earlier losses to gain a few cents towards $82 on Wednesday after China said imports jumped in February, boosting evidence that emerging Asian economies will lead global demand back into growth this year.
China imported 18.5 million tonnes of crude in February, up 8.2 per cent from January, the country's General Administration of Customs said on Wednesday. Fuel imports rose almost 14 per cent, while fuel exports tumbled almost 41 percent.
"It's a strong reading, particularly because February was a short month and you had the Chinese New Year holiday," said David Moore, commodities strategist at the Commonwealth Bank of Australia in Sydney.
"These numbers will provide short-term support for the oil price, while people will be watching the EIA data," Moore added, referring to government data on US inventories to be published by the Energy Information Administration at 1530 GMT.
US crude for April delivery advanced 10 cents to $81.59 by 0450 GMT, within $1 of Monday's peak of $82.41, the highest level since prices jumped to a 15-month high of $83.95 on January 11. London ICE Brent for April gained 16 cents to $80.07.
Top crude oil exporter Saudi Arabia will keep supply at full contracted volumes in April to at least six of its Asian term buyers, industry sources said on Wednesday except for a major buyer who will receive 10 percent less than nominated volumes.
The news was in line with most industry expectations.
Higher US inventories
Before the Chinese trade data, oil fell as low as $81.05 a barrel on Wednesday, sapped by an industry report showing US crude stockpiles jumped more than expected last week, dampening hopes of a strong demand recovery in the world's top user.
"The market has been strong on the belief that the economy is slowly getting better, but it's probably gone too far," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.
US crude inventories rose by 6.5 million barrels in the week to March 5, against analysts' forecasts for an increase of 1.9 million barrels, the industry-funded American Petroleum Institute (API) said on Tuesday.
The API also said US gasoline stockpiles fell 3.2 million barrels, after a Reuters poll of analysts forecast a gain of 200,000 barrels.
"The crude market seems to have been driven by gasoline on the way up," Mitsubishi's Nunan said. "It's a seasonal thing; as we go into spring, there is usually a gasoline-driven rally."
Inventories of distillates -- which includes diesel and heating oil -- showed a 2.8 million barrel draw, compared with forecasts for a 900,000 barrel draw.
Oil demand declined in 2008 and 2009 during the biggest recession of the post-war era. – Reuters