Business

Published: Thursday August 13, 2009 MYT 8:33:00 AM

Oil rises as US imports jump, China buys crude


NEW YORK (AP) - Oil prices rose Wednesday as the market reacted favorably to signs of an increase in future demand in China and a further loosening of the recession's grip in the U.S.

That trumped data showing a continued slump in America's appetite for oil.

Benchmark crude for September delivery climbed 71 cents to settle at $70.16 a barrel on the New York Mercantile Exchange. In London, Brent prices added 43 cents to settle at $72.89 a barrel on the ICE Futures exchange.

Prices jumped in morning trading after the government said the U.S. trade deficit increased slightly in June. The Commerce Department reported that imports rose for the first time in 11 months.

The International Energy Agency, based in Paris, said demand for crude this year may not be as weak as once thought, largely because of China.

The reports from both sides of the Atlantic were enough to offset news that crude supplies continue to grow in the U.S. The U.S. Energy Information Administration said oil placed into storage rose for the third straight week.

Given the economy in the U.S. and Europe, energy prices might have fallen further if not for China.

The IEA said Chinese energy consumption would push the overall global crude demand higher despite continued weakness in Europe and North America.

How China does during the global economic downturn has effected energy prices for the rest of the globe. The country imported a record 4.6 million barrels of fuel a day last month.

It is that purchasing power that helped change the outlook from the IEA, which added 70,000 barrels a day to its 2010 forecast of global oil demand. The new prediction of 85.3 million barrels a day is a 1.6 percent increase over this year. The IEA also boosted its 2009 forecast by 190,000 barrels a day to 83.9 million barrels a day, but noted this is still 2.7 percent lower than 2008.

Both OPEC and the U.S. Energy Department's Energy Information Administration were more downbeat. The EIA on Tuesday said global crude demand will likely fall by 1.71 million barrels this year, more than its previous forecast of a drop of 1.56 million barrels.

And the Organization of Petroleum Exporting Countries said it expects consumption to slide by 1.65 million barrels a day this year, before rising next year.

In other Nymex trading, gasoline for September delivery lost 1.69 cents to settle at $2.0253 a gallon and heating oil gave up 1.96 cents to settle at $1.8921 a gallon.

Natural gas for September delivery also lost 6.2 cents to settle at $3.479 per 1,000 cubic feet.

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