SINGAPORE, July 15 (Reuters) - Brent crude rose to near $109 a barrel on Monday as worries about demand growth ebbed after data from China showed the world's second-biggest economy expanded in line with expectations.
China's GDP grew 7.5 percent in April-June, and while that marked a slow down in nine of the last 10 quarters, it was a relief for some investors who were primed for a lower number. Industrial output was slightly less than forecast, but crude runs in the country's refineries and implied oil demand both rose in June, supporting oil markets further.
Brent crude had gained 15 cents to $108.96 a barrel by 0710 GMT, swinging between a high of $109.17 and a low of $108.61. U.S. oil was up 10 cents at $106.05, recovering from a low of $105.50 hit earlier in the day.
"Overall, the latest numbers from China were in line with expectations, there were no huge surprises and it is a continuation of the soft theme," said Ric Spooner, chief market analyst at CMC Markets. "But industrial output numbers were weak, and there is growth risk to the downside, going forward."
China's implied oil demand rose nearly 10 percent in June over a year ago to 9.94 million barrels per day (bpd), Reuters calculations based on preliminary government data showed. Crude runs rose 10.8 percent to 9.636 million bpd, the highest daily output since February, as refineries boosted production after maintenance.
But the strong growth in refinery runs and implied demand are unlikely to be sustained through the rest of the year, and the rise in oil demand would be around 5 percent for 2013, said Sijin Chen, an analyst with Barclays.
"The growth in refinery runs is probably an exaggeration because of a low base," Chen said. "Last year, China was lowering runs and destocking very aggressively and they haven't been so aggressive this year."
SPREAD
Still, the latest data out of China helped oil futures extend gains. U.S. crude has outperformed Brent for the past two weeks, narrowing the European benchmark's premium to U.S. crude CL-LCO1=R to a 2-1/2 year-low of $1.32 at one point on Thursday. It was at around $3 on Monday.
Big hedge funds built up a near-record long position in U.S. crude oil futures in the week to July 9, helping fuel a resurgence in the U.S. benchmark.
The latest weekly data from the U.S. Commodity Futures Trading Commission showed funds increased their net long futures and option positions in NYMEX and ICE U.S. crude by more than 26,000 contracts to more than 330,000 during the period, nearing the record they held amid the Libyan civil war in 2011.
Lingering concerns of supply disruption also provided further support. Brent has held above $100 for most 2012 and this year due to tensions between the West and Iran over Tehran's disputed nuclear programme.
Israeli Prime Minister Benjamin Netanyahu said on Sunday that Iran was getting closer to the "red line" he set for its nuclear programme. Investors are also watching the regime change in Egypt. (Editing by Himani Sarkar and Joseph Radford)
