Oil Near 3-Month High Amid Speculation Of China Stimulus

Oil 

Oil traded near a three-month high in New York as speculation that China will take more steps to boost economic growth offset signs of weakening demand in the U.S.

Futures advanced as much as 0.6 percent. Growth in China’s industrial production slowed while inflation cooled for a fourth straight month in July, providing more room for policies to stimulate the economy of the world’s second-biggest oil consumer. U.S. petroleum consumption fell 1.1 percent last week, the first drop in four weeks, the Energy Department said yesterday. OPEC trimmed its forecast for demand for its crude and said Iraq’s output surpassed 3 million barrels a day for the first time since 2002.



“The market is in a mode where all that matters is the prospect of central bank monetary stimulus,” said Guy Wolf, a strategist at Marex Spectron Group Ltd., a London-based commodities brokerage, which predicts Brent crude will be capped at $120 a barrel. “So soft growth data, without inflationary pressure, is a green light for central banks. Further stimulus in China is almost a certainty.”

Oil for September delivery was at $93.54 a barrel, up 19 cents, or 0.2 percent, in electronic trading on the New York Mercantile Exchange at 12:04 p.m. London time. Prices climbed to as much as $94.72 yesterday, the highest since May 15. The contract is up 20 percent from its lowest close this year of $77.69 on June 28.

Brent crude for September settlement was little changed, up 2 cents, to $112.16 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to West Texas Intermediate was at $18.65, down from $18.79 yesterday.

China Inflation

Iraq’s crude output rose above 3 million barrels a day last month for the first time since the 2003 U.S.-led invasion that toppled Saddam Hussein, according to the Organization of Petroleum Exporting Countries. Iraq pumped 3.08 million barrels a day in July, 115,000 barrels more than the previous month, OPEC’s Vienna-based secretariat said today in its Monthly Oil Market Report.

OPEC said its 12 members will need to supply 29.5 million barrels of crude a day in 2013, or 100,000 a day less than last month’s estimate.

China’s consumer prices rose 1.8 percent from a year earlier, the National Bureau of Statistics said today. That compares with the 1.7 percent median forecast in a Bloomberg News survey of 33 economists and a 2.2 percent gain in June.

The deceleration in price gains may encourage policy makers to introduce more measures to support growth, aiding efforts to reverse a slowdown that’s lasted six quarters.

bloomberg 2012-08-09

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