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Oil climbs above $112 on stronger China trade

Source : REUTERS
Last Updated: Thu, Jan 10, 2013 09:50 hrs
A worker pumps petrol into a customer's car at a fuel station in Sidon, southern Lebanon

Brent crude oil rose above $112 per barrel on Thursday after Chinese trade data beat forecasts, raising expectations that a recovery in the world's second-biggest oil consumer would drive fuel demand higher.

China's import and export growth in December were well above most projections, widening the country's trade balance to $31.6 billion from $19.6 billion in November, and boosting Asian shares.

Front-month Brent futures rose 50 cents to $112.26 per barrel by 0900 GMT. U.S. crude was up 55 cents to $93.65.

"Risk is back on after the China data," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. "General market sentiment is much more positive, with hopes of better growth pushing up most markets."

Commodities and other riskier assets climbed and stock markets rallied with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.7 percent, near its highest since August 2011.

Trade data from the world's second-largest economy showed the value of exports grew 14.1 percent last month from a year earlier, racing past the forecasts of analysts polled by Reuters, who had expected annual growth of 4 percent, and accelerating sharply from 2.9 percent in November.

The value of imports grew 6 percent in December on the year, also beating market forecasts for a rise of 3 percent and quickening from zero growth in November.

China's crude oil imports for 2012 rose 6.8 percent from the previous year, data from China's General Administration of Customs showed on Thursday, in line with the 6.7 percent rate reported last month for January to November.

Investors awaited a news conference of the European Central Bank at 1330 GMT, when ECB President Mario Draghi was expected to strike a slightly more positive tone after recent signs of stabilisation in the euro zone economy.

The ECB is expected to keep interest rates at a record low of 0.75 percent on Thursday, refraining from a cut as inflation is still well above its target.

The United States will announce initial jobless claims for the week ended January 5, which may offer some hints on the health of the world's biggest economy, while the U.S. currency's recent strength has hurt commodities priced in dollars, such as oil.

Oil prices fell on Wednesday after data showed U.S. gasoline inventories rose to a two-year high, while crude oil production rose above 7 million barrels per day for the first time in nearly 20 years.

Commodities analysts from Societe Generale described the U.S. oil figures as "unambiguously bearish" saying the data on oil products showed "serious weakness in gasoline and distillate demand (mostly diesel), which is very worrying for the U.S. economy."

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