Forexpros – Crude oil futures surged higher in early U.S. trade Friday, as investors speculated China will implement fresh stimulus measures to boost the economy and after the U.S. tightened sanctions on Iran.
Crude oil soared 0.93% to USD86.88 per barrel during early U.S. trade.
Boosting oil prices, government data indicated that China’s economy grew 7.6% in the second quarter, in line with expectations and following 8.1% growth in the first three months of 2012.
In addition, the data revealed the slowest pace of Chinese economic growth in three years, prompting investors to speculate that the country may add stimulus measures to shore up growth.
Separate reports showed that fixed asset investment in China rose 20.4% in June, beating expectations for a 20% increase, while industrial production advanced 9.5% in June, slightly below expectations for a 9.8% rise.
The Asian nation is the world’s second largest oil consumer after the U.S. and has been the engine of strengthening demand.
In oil bearish news, the commodity came under pressure on Thursday, after the minutes of the Federal Reserve’s latest policy meeting disappointed expectations for further easing to boost growth in the U.S.
The minutes of the central bank’s June policy-setting meeting revealed that only a few board members thought that more asset purchases would be necessary. Several other officials indicated that more action could be warranted if growth slows, risks intensified or if inflation seemed likely to fall “persistently” below their goal.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Meanwhile, investors remained cautious after Moody’s rating agency downgraded late Thursday Italy’s credit rating to near-junk status just ahead of a bond auction later in the day, threatening to spark fresh fears over the debt crisis in the euro zone.
Markets also remained nervous after the head of Italy’s business group warned on Thursday that Italy’s economy will shrink by more than 2.4% this year, a deeper contraction than previously expected.
Lingering concern over the deteriorating situation in Spain following Wednesday’s announcement of EUR65 billion in new austerity measures also weighed.
Market analysts warned that the fresh budget cuts were likely to drag Spain’s economy deeper in to a recession.
In bullish news, Iran pumped oil at the slowest pace in 22 years per the International Energy Agency. In addition the U.S. will target the National Iranian Tanker Company, 20 financial institutions and four front companies it believes are being used to evade international sanctions.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.10% to trade at 101.80 a barrel, with the spread between the Brent and crude contracts standing at USD15.72.
London-traded Brent prices rallied to a three-week high of USD102.33 a barrel on July 5.
Brent prices have been well-supported in recent sessions amid concerns over tightening supplies from Norway.
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