Brent crude advanced after a three-day decline on signs that demand is strengthening as the economic recovery takes root in developed nations.
Futures gained as much as 1.5 percent in London. Global oil consumption will increase more this year than previously forecast as growth gathers momentum, the International Energy Agency said today in its monthly market report. Demand in developed countries expanded last year for the first time since 2010, the Paris-based IEA said. The People’s Bank of China yesterday added funds and expanded access to a lending facility as money-market rates surged.
“People are heartened by the rosy picture in the U.S.,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London. “The action by the Chinese central bank to inject money may improve the picture in China too.”
Brent for March settlement climbed as much as $1.57 to $107.92 a barrel on the London-based ICE Futures Europe exchange and was at $107.76 as of 1:15 p.m. local time. The European benchmark was at a $12.91 premium to West Texas Intermediate, compared with $11.89 on Jan. 17. The volume of all contracts traded was 46 percent more than the 100-day average.
WTI for March delivery, the most-active crude contract on the New York Mercantile Exchange, rose 26 cents to $94.85 a barrel in electronic trading. Floor trading in the U.S. was closed yesterday for the Martin Luther King Jr. holiday, and transactions will be booked today for settlement purposes.
The February future, which expires today, was up 23 cents at $94.60. It climbed 41 cents to $94.37 on Jan. 17, the highest close since Jan. 2.
World consumption will climb by 1.3 million barrels a day, or 1.4 percent, to 92.5 million barrels a day, the IEA said in its Oil Market Report. The increase of 90,000 barrels a day from last month is the first year of annual demand growth in developed nations since 2010, it said. U.S. restrictions on exports may mean its surging domestic production hits a “crude wall” that curbs further expansion, the IEA said.
China’s benchmark money-market rate fell while stocks rebounded as the central bank added more than 255 billion yuan ($42 billion) to the financial system and expanded a loan facility to meet Lunar New Year demand for cash.
The seven-day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44 percent in Shanghai, according to a daily fixing compiled by the National Interbank Funding Center. It surged 153 basis points yesterday, the most in seven months. The Shanghai Composite Index climbed 0.9 percent today, after closing below 2,000 yesterday for the first time since July.
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