Heating oil surged to a six-week high on speculation China’s slowest expansion in three years may prompt policy makers to add economic stimulus.
Futures capped a third consecutive week of gains as Chinese gross domestic product expanded at 7.6 percent last quarter from a year earlier, the National Bureau of Statistics said. Refinery rates in China slowed and power output stalled. Futures widened gains as stocks rallied and the euro rebounded from two-year lows against the dollar.
“There’s the idea that slower Chinese expansion is going to bring more stimulus into the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Heating oil for August delivery rose 1.49 cents, or 0.5 percent, to $2.7882 a gallon on the New York Mercantile Exchange, the highest settlement since May 29. Futures gained 2.9 percent this week, marking the first three-week string of gains since Feb. 24.
Premier Wen Jiabao pledged to intensify fine-tuning of policies as downward pressure on the economy remains “relatively large,” according to a July 8 report by the official Xinhua News Agency. First-half expansion was 7.8 percent, the statistics bureau said. Wen in March set a 7.5 percent growth target for this year, down from an 8 percent goal in place since 2005.
“Even though the Chinese GDP data is less than it has been, the market still likes that it is at least 7 percent,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Chinese refining slid to 8.79 million barrels a day last month, the least since October and down 3.4 percent from May, according to the statistic bureau. Electricity generation was unchanged in June from a year earlier at 393.4 billion kilowatt-hours, the bureau’s data showed.
The MSCI All-Country World Index of stocks added 1.5 percent at 3:24 p.m. in New York and the Standard & Poor’s 500 Index gained 1.7 percent.
Federal Reserve Bank of Atlanta President Dennis Lockhart said the central bank may need to initiate a new program of asset purchases if recent economic weakness persists and undermines his forecast for a pickup in the second half of the year.
The Federal Open Market Committee, the policy-making arm of the bank, voted last month to extend its maturity extension program, known as Operation Twist, and said it would consider additional stimulus if needed.
“The oil market is very strong on the equities and the talk of stimulus,” said Fred Rigolini, vice president of Paramount Options Inc. in New York. “We’re looking for a little bit of hope here.”
The euro rose 0.3 percent against the dollar on speculation of more global stimulus and as Medley Global Advisors predicted the European Central Bank will ease monetary policy further. A weaker dollar increases the investment appeal of commodities.
August-delivery gasoline gained 0.99 cent, or 0.4 percent, to $2.8161 a gallon on the exchange, the highest settlement since May 31. Prices rose 3.7 percent this week.
Regular gasoline at the pump, averaged nationwide, rose 0.4 cent yesterday to $3.388 a gallon, according to AAA. It was the highest price since June 25. Gasoline reached a year-to-date high of $3.936 on April 4.