BLBG: Crude Oil Rises From Four-Week Low as China’s Economy Expands
By Ann Koh and Ben Sharples
Jan. 21 (Bloomberg) -- Crude oil rose from a four-week low after China’s economy expanded at the fastest pace since 2007, bolstering expectations demand in the world’s second-biggest energy user will increase.
Oil recouped some of yesterday’s loss after China’s gross domestic product growth accelerated to 10.7 percent in the fourth quarter, the statistics bureau said. The country refined a record volume of crude oil last year as a recovering economy boosted demand for fuels.
“With Chinese aggressively building crude and oil product reserves, the overall demand growth in China this year will likely get stronger,” said Victor Shum, a senior principal at constultants Purvin & Gertz Inc. in Singapore. Oil at “$75 to $77 a barrel will likely be viewed by investors as a buy opportunity,” he said.
Crude oil for March delivery rose as much as 46 cents, or 0.6 percent, to $78.20 a barrel in electronic trading on the New York Mercantile Exchange. It was at $77.91 at 4:23 p.m. in Singapore. Yesterday, the contract declined $1.58, or 2 percent, to end the session at $77.74. The February contract, which expired yesterday, fell $1.40, or 1.8 percent, to $77.62.
Oil traded below $78 today on concern China’s government may slow lending to prevent inflation from accelerating. Chinese regulators asked some of the nation’s banks to limit credit after the institutions lent a record 9.59 trillion yuan ($1.4 trillion) last year.
China’s Expansion
“I expect some upward movement for oil,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. Oil prices recently underwent a “China- based moderation” after the nation’s central bank last week raised reserve requirements for the first time in 18 months, he said.
China’s gross domestic product rose more than the median forecast of 10.5 percent in a Bloomberg News survey, a statistics bureau report showed in Beijing today. For the full year, GDP gained 8.7 percent, beating Premier Wen Jiabao’s 8 percent target.
Oil prices fell yesterday to the lowest since Dec. 23 on speculation that a U.S. government report will show a third consecutive gain in crude stockpiles.
An Energy Department report today will probably show that crude oil supplies climbed 2.4 million barrels in the week ended Jan. 15 from 331 million the prior week, according to the median of 17 analyst responses in a Bloomberg News survey. Gasoline supplies rose 2 million barrels, the survey showed.
API Data
The American Petroleum Institute reported yesterday that crude-oil supplies declined 1.8 million barrels to 328.3 million last week.
“A lot of people believe the economies will recover in the future, but the facts are not so happy at the moment,” said Ken Hasegawa, a commodity derivatives sales manager at Newedge in Tokyo. “It will take a longer time to see a strong recovery.”
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
“Looking at the fundamentals, we’re not seeing substantial improvement in the manufacturing and industrial production sectors in the advanced economies, especially the U.S.,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “Until we see greater evidence of that, oil will struggle to make much upward progress.”
A 55,000-barrel oil storage tank in Cushing, Oklahoma, the delivery point for benchmark West Texas Intermediate crude, caught fire after being struck by lightning during a thunderstorm.
The blaze, which began around 9:45 p.m. local time yesterday, may be put out by midnight, keeping most of the oil inside the tank intact, Pete Schwiering, president of operator SemCrude, a unit of SemGroup Corp., said by telephone from Oklahoma City, about 70 miles (113 kilometers) southwest of Cushing. The tank is owned by Blueknight Energy Partners LP, Schwiering said.
Brent crude oil for March settlement rose as much as 35 cents, or 0.5 percent, to $76.67 a barrel on the London-based ICE Futures Europe exchange. It was at $76.36 a barrel at 4:24 p.m. Singapore time. It declined $1.31, or 1.7 percent, to end the session at $76.32 a barrel yesterday.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net.
