BS: Oil rises to around $73 after Chinese exports report
Oil rose more than $1 to around $73 today on strong Chinese exports and after an industry report showed a larger-than-expected decline in US crude stocks.
Chinese exports grew about 50% from a year earlier in May, Reuters reported on Wednesday, in a sign the economy of the second-largest oil user was roaring ahead.
The export figure in the Reuters report, which came ahead of tomorrow’s official release, far exceeded expectations and fuelled a rise in stock markets globally.
Adding to the picture of rising oil demand, US crude inventories fell 4,5 million barrels last week, the American Petroleum Institute (API) said yesterday after the close of trade, more than four times as much as expected.
US crude for July delivery was up $1,04 at an intra-day high of $73,03 by 1150 GMT. The contract was still down almost 2% so far this month after an almost 14% decline in May. July ICE Brent was trading up 56 cents at $72,86.
“The Chinese figures may add extra confidence to financial markets at a time when many think the dollar may have peaked,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
“The API report of a big draw in crude oil stocks is also lending some support,” he added.
The US Energy Information Administration will publish more closely watched government statistics on oil inventories and demand today at 1430 GMT.
The drop in US crude inventories reported by the API was matched by an equivalent increase in product supplies.
Gasoline stocks posted an unexpected increase of 1,5 million barrels and distillates, including heating oil and diesel, logged a larger-than-forecast gain of 3 million barrels.
An expanded Reuters poll of analysts said crude inventories probably fell 900 000 barrels on average in the week to June 4.
US Federal Reserve officials on Tuesday gave conflicting signals on the direction of interest rates, highlighting an increasingly important split within the central bank.
“Changes in market views about the economy will continue to affect all risky markets, and commodities are no exception,” JP Morgan said in a report dated June 8. “The key driver however is the strength of developing market oil demand, with diesel demand increasing in line with the recovery in global trade.”
“Crude oil demand will increase sharply in the coming weeks as Asian refineries ramp up throughput as seasonal maintenance comes to an end,” it added.
Chinese trade data for May, including oil statistics, will be published tomorrow, followed by industrial production for the same month on Friday, with growth forecast at 17,1% in a Reuters survey, down from a 17,8% gain in April.
BP said in its annual Statistical Review of World Energy released today that world oil consumption fell 1,2 million barrels per day in 2009, the second consecutive annual decline and the largest drop in volume since 1982.
World oil production dropped by 2 million bpd, or 2,6%, which was also the largest decline since 1982, it said.
