Economy- Oil Prices Rise on China Industrial Output, IEA Forecasts – WSJ.com

Posted: August 9, 2013 in Uncategorized

Aug. 9, 2013

NEW YORK–Oil futures rose Friday, snapping a five-session losing streak, following bigger-than-expected growth in Chinese industrial production and the International Energy Agency’s warning of continued supply outages in Libya and Iraq.

Light, sweet crude for September delivery recently traded up $1.29, or 1.3%, at $104.69 a barrel on the New York Mercantile Exchange. ICE North Sea Brent Crude Oil for September delivery traded 38 cents higher at $107.06 a barrel.

China’s National Bureau of Statistics said Friday that industrial output rose 9.7% on year in July, from 8.9% in June. Economists surveyed by Dow Jones Newswires had expected 9% growth in July.

China is the world’s second-largest oil consumer after the U.S., but over the past few months traders have been concerned that growth was slowing down. On Thursday, Chinese customs authorities said the country imported 26.11 million metric tons of crude oil in July, 20% more than the same period last year.

“This is the second day of good data out of China,” said Gene McGillian, broker and analyst at Tradition Energy. He said this suggested that China “may return to its position as one of the drivers of oil prices.”

Crude-oil futures also were buoyed after the IEA, which represents some of the world’s largest oil consumers, said it expected demand for the Organization of the Petroleum Exporting Countries’ oil at 29.8 million barrels a day in 2013, an increase of 200,000 barrels a day from its previous forecast.

In its monthly report, the IEA also said “continued supply outages in Iraq and Libya…may reduce the group’s output in coming months.” Tensions in Libya and Iraq have already resulted in a decline in OPEC’s output by 170,000 barrels a day in July.

Analysts said the crude-oil market was stabilizing Friday after prices fell 4.2% in the past five sessions. Prices were weighed down by an increase in gasoline inventories last week. Concerns about the longevity of the U.S. Federal Reserve’s $85-billion-a-month bond-buying program also held investors’ attention after a voting member of the Fed’s board didn’t rule out that the central bank could begin reducing purchases at its September policy meeting.

Traders closely watch Fed commentary as the central bank’s stimulus measures have helped prop up economic growth in the U.S. There are fears that a reduction in bond purchases could result in lower demand for oil.

“Price swings over a week’s time will continue to be generated by rapidly changing perceptions of a shift in Fed stimulus,” said Jim Ritterbusch, head of oil-trading advisory Ritterbusch & Associates, in a note.

Front-month September reformulated gasoline blendstock, or RBOB, recently traded 1.62 cents higher at $2.8738 a gallon. September ultra-low sulfur diesel heating oil recently traded 0.32 cent higher at $2.9603 a gallon.

via Oil Prices Rise on China Industrial Output, IEA Forecasts – WSJ.com.

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