Oil Rises, Heads for Weekly Gain on U.S., Asian Economic Data

Oil climbed to near a three-week high as economic indicators from the U.S. and Asia restored confidence that the recovery will stimulate fuel demand.

Oil was set for a 1.4 percent weekly increase as U.S. jobless claims fell, Japan boosted its estimate of economic growth, and China raised imports of crude. Prices gained after a leak prompted Enbridge Energy Partners LP to shut a pipeline that can carry more than a third of the crude oil shipped to the U.S. Midwest.

“Everyone is hoping China will rescue the oil market, which it’s definitely doing at the moment,” said Eugen Weinberg, head of commodity research at Commerzbank AG in Frankfurt. “I wouldn’t be surprised to see a sell-off, if this pipeline is fixed over the weekend.”

The October contract gained as much as $1.70, or 2.3 percent, to $75.95 a barrel in electronic trading on the New York Mercantile Exchange, and was at $75.48 at 12:54 p.m. London time. Brent crude for October traded at $77.35 a barrel, 12 cents lower, on the London-based ICE Futures Europe exchange.

Brent’s premium over its New York equivalent shrank following the U.S. pipeline leak. The London-traded contract was $1.87 higher than Nymex oil, compared with a premium of $3.65 earlier this week.

New York crude rose even as the International Energy Agency left its estimate for oil demand for this and next year little changed. Crude demand worldwide will average 87.9 million barrels a day in 2011, the IEA said today in its monthly Oil Market Report, unchanged from last month’s forecast.

Downside Risk

The agency revised its 2010 estimate 50,000 barrels a day higher to 86.6 million. Soaring stockpiles and slowing Asian consumption are keeping a cap on oil prices and there is a “significant downside risk” that demand will falter should the global recovery stall, it said.

Initial jobless claims dropped in the U.S. by 27,000 to 451,000 last week, according to Labor Department figures, compared with the median economist estimate of 470,000 in a Bloomberg survey.

Oil futures reversed yesterday’s 0.6 percent decline as customs figures showed that China increased net imports of crude in August by 10 percent from July.

“The Chinese trade figures were positive and show an economy where production growth is relatively strong,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “There is positive sentiment in the market, and as a result you’re seeing oil as a benefactor.”

Japan Growth

China’s net crude purchases rose to 20.65 million metric tons from 18.8 million tons in July, according to preliminary data released today by the Beijing-based General Administration of Customs. Net imports of oil products doubled to 490,000 tons.

Japan’s gross domestic product grew at an annualized 1.5 percent rate in the three months ended June 30, a Cabinet Office report showed, faster than the 0.4 percent reported last month.

In the U.S., crews are investigating Enbridge’s Line 6A, part of its Lakehead system, said Glenn Herchak, a company spokesman. It can carry 670,000 barrels a day of oil from Canada to refineries in the U.S. Midwest, according to a company website. He declined to provide information on what the line was carrying and if it was at full rates.

Crude oil may fall next week on concern that global economic growth will slow, reducing fuel demand and bolstering supplies, a Bloomberg News survey showed.

Twelve of 22 analysts, or 55 percent, forecast crude oil will decline through Sept. 17. Six respondents, or 27 percent, predicted that futures will be little changed, and four projected prices will rise. Last week, 41 percent said crude would decrease.