Oil futures jumped back above $100 a barrel Tuesday, lifted by better-than-expected economic growth in China that boosted expectations for higher crude demand.
Oil futures jumped back above $100 a barrel Tuesday, lifted by
better-than-expected economic growth in China that boosted expectations for
higher crude demand.
Light, sweet crude for February delivery recently gained $1.55, or 1.6%, to
$100.25 a barrel on the New York Mercantile Exchange. Brent crude on ICE
Futures Europe added 15 cents, or 0.1%, to $111.49 a barrel.
China
's
economy grew at a brisk 8.9% pace in the last quarter of 2011. Although the
pace marked a slowdown from the year-ago quarter, the figure beat many
analysts' expectations and eased concerns of a demand slowdown in the world's
No. 2 crude consumer.
"It was the perfect number for commodities," said Phil Flynn, an
analyst at PFG Best in
Chicago
. "It
was strong enough not to worry about a dramatic drop in demand, yet it was weak
enough to imply we'll see" additional stimulus measures to further help
demand.
The oil market has increasingly turned to
China
to
support demand and prices in recent years, as the country continues to enjoy
brisk growth despite weakness in the
U.S.
and
Europe
. That
growth has helped feed surging demand for automobiles and has made the country
the second-largest oil consumer after the U.S.
Still, the fourth-quarter figure marked a decline from both the year-ago level
and the previous quarter, leaving lingering concerns that oil demand could be
shrinking in the long run. Between 2000 and 2009,
China
's
economy grew at an average pace of 10%, according to the U.S. Energy
Information Agency.
Tuesday's rally marks a quick return of the
U.S.
benchmark to the $100 mark. Nymex futures had spent all of 2012 above the
psychological level, until a selloff late last week sent it as low as $98.70.
Separately, oil prices were underpinned Tuesday by comments from
Saudi
Arabia
's oil minister indicating
that $100-a-barrel oil was desirable. The comments signal that
Saudi
Arabia
, the world's biggest oil
exporter, will likely be adjusting its output to defend the price as producers
such as
Libya
and
Iraq
see
their own exports return to the market.
The comments also suggest that the country won't be flooding the market with
crude if western nations push forward with stricter oil sanctions against
Iran
.
"The ambiguity of the proposed embargo on
Iran
is
that it relies on a stronger world partnership with
Saudi
Arabia
, but
Saudi
Arabia
has been particularly good at
defending its own interest first," said Olivier Jakob, head of the Swiss
oil consultancy PetroMatrix.
Front-month February reformulated gasoline blendstock, or RBOB, recently traded
up 5 cents, or 1.8%, to $2.7842 a gallon. February heating oil traded up 1.75
cents, or 0.6%, to $3.0447 a gallon.
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