Forex Pros – Crude oil futures snapped two days of declines on Tuesday, easing off a one-month low after data showed China’s industrial production grew more-than-expected in May, while a weaker U.S. dollar also lent support.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD97.61 a barrel during European morning trade, gaining 0.76%.
It earlier rose to a daily high of USD97.78 a barrel.
Earlier in the day, Chinese government data showed that industrial production expanded 13.3% in May, beating expectations for a 13.1% increase, boosting oil demand expectations and easing worries over a slowdown in domestic growth.
Chinese refiners processed 38.47 million metric tons of crude in May, 6% more than a year earlier, the data showed. Gasoline output climbed 3.6% and diesel production rose 8.2%.
China’s implied oil demand in May topped the 9-million-barrel-per-day mark for the seventh month in a row.
A separate report showed that that consumer price inflation rose at the fastest pace since July 2008 in May, climbing at an annualized rate of 5.5%, broadly in line with expectations.
Crude prices were largely unchanged after the People’s Bank of China announced that it was raising reserve requirements for banks by 0.5% starting June 20.
China is the world’s second largest crude oil consumer, with the International Energy Agency forecasting that China will account for approximately 40% of global oil demand growth in 2011.
Weakness in the U.S. dollar helped lift crude prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.26% to trade at 74.69.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery edged 0.22% higher to trade at USD118.43 a barrel, up USD20.82 on its U.S. counterpart.