WTI Snaps Five-Day Drop as China Industrial Output Gains

West Texas Intermediate crude rose for the first time in six days, trimming a weekly drop as industrial production advanced more than forecast in China, the second-biggest oil consumer.

Futures gained as much as 1.4 percent in New York, snapping the longest streak of declines since December. China’s factory output climbed 9.7 percent in July from a year earlier, 0.8 percentage points higher than forecast in a Bloomberg survey, figures from the National Bureau of Statistics show. Prices held gains even as the International Energy Agency cut its estimate for 2014 global oil demand growth.

“Better-than-expected Chinese industrial data was always going to give a boost to risky assets such as oil,” said Michael Hewson, a market analyst at CMC Markets Plc in London, who forecasts North Sea Brent crude to drop to $103 a barrel by the end of the year and WTI to fall as low as $95. “Oil did drop yesterday so we were always going to get a bit of a pullback from that too.”

WTI for September delivery advanced as much as $1.42 to $104.82 a barrel in electronic trading on the New York Mercantile Exchange and was at $104 as of 1:46 p.m. London time. The contract fell 97 cents to $103.40 yesterday amid speculation that the Federal Reserve will trim stimulus measures in the U.S. Prices are down 2.8 percent this week.

Brent Crude

Brent for September settlement rose 0.4 percent to $107.09 a barrel on the London-based ICE Futures Europe exchange. The European benchmark was at a premium of $3.09 to WTI, down from $3.28 yesterday.

Trading in two North Sea crudes, Ekofisk and Oseberg, has jumped almost eightfold on the Platts platform after quality premiums were introduced May 1 to boost liquidity and enhance Dated Brent’s stature as a global oil benchmark, data provided by the price publisher show.

China’s retail sales climbed 13.2 percent in July, the National Bureau of Statistics in Beijing said today. They were projected to rise 13.5 percent, according to a Bloomberg survey.

Total exports of goods from China rose 5.1 percent last month, figures from the General Administration of Customs showed yesterday. They were expected to gain by 2 percent, according to a Bloomberg survey. Imports climbed 10.9 percent, compared with a forecast 1 percent increase in the survey.

Global Demand

China was the second-biggest oil consumer last year, accounting for about 11 percent of global demand, compared with 21 percent for the U.S., IEA data show.

The IEA trimmed its 2014 oil demand growth estimate amid slowing expansion in China and a struggle to secure a recovery in the U.S. and Europe. Global consumption will increase by 1.1 million barrels a day, or 1.2 percent, to 92 million next year, the Paris-based agency said today. The expansion is 100,000 barrels a day less than its forecast last month.

OPEC maintained its demand growth forecast for next year at about 90.8 million barrels in its monthly report, which was also published today.

Crude output from the 12 members of the Organization of Petroleum Exporting Countries fell last month amid declines in Iraq and Libya, according to the monthly reports from both OPEC and the IEA. A supply increase from Saudi Arabia muted the total reduction.

WTI will probably drop next week on speculation that the Federal Reserve will start as soon as this month to pare bond purchases that have bolstered the economy and energy demand, according to a Bloomberg News survey of analysts and traders.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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