West Texas Intermediate crude climbed for the first time in six days as industrial production increased in China, the second-biggest oil-consuming country.
Futures advanced 2.5 percent after data from China’s National Bureau of Statistics showed factory output increased 9.7 percent in July, 0.8 percentage point more than forecast in a Bloomberg survey. There have been recent “signs of strength” in oil markets with a 3.1 million-barrels-a-day surge in world refinery operating rates in June, the International Energy Agency said in a report today.
“The industrial numbers out of China were impressive,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy. “This comes on top of a week’s worth of positive Chinese data.”
WTI crude for September delivery advanced $2.57 to settle at $105.97 a barrel on the New York Mercantile Exchange. The volume of all futures traded was 7.6 percent above the 100-day average. Prices dropped 0.9 percent this week.
Brent oil for September settlement rose $1.54, or 1.4 percent, to end the session at $108.22 a barrel on the London-based ICE Futures Europe exchange. Volume was 16 percent below the 100-day average. The European benchmark traded at a $2.25 premium to WTI, down from $3.28 yesterday.
The acceleration in Chinese factory output follows a series of positive figures. Retail sales climbed 13.2 percent in July, the National Bureau of Statistics in Beijing said today. Total exports of goods from China rose 5.1 percent last month, figures from the General Administration of Customs showed yesterday. The Non-Manufacturing Purchasing Managers’ Index showed the first gain since March, according to government data on Aug. 3.
China accounted for about 12 percent of global crude demand in 2012, ranking it second after the U.S., according to BP Plc’s Statistical Review of World Energy.
“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 Brent crude to drop to $103 a barrel by the end of the year and WTI to fall as low as $95.
Global refining rates probably increased in July, the Paris-based IEA, an adviser to developed nations, said today in its monthly market report.
The surge in refinery rates in June was “unprecedented,” leading to “overhang” of fuel inventory, Antoine Halff, head of IEA’s oil markets and industry division, said from Paris today in an interview with Bloomberg television.
The IEA trimmed its 2014 global oil demand-growth estimate by 100,000 barrels from last month. Worldwide consumption will increase by 1.1 million barrels a day to 92 million next year. The Organization of Petroleum Exporting Countries maintained its demand-growth forecast for next year at about 90.8 million barrels in its monthly report today.
“The IEA and OPEC reports can be taken as either bullish or bearish depending on what numbers you focus on, but on balance they seem more supportive to me,” Kilduff said.
U.K. exports rose to a record in the second quarter, adding to signs of a broadening recovery, data from the Office for National Statistics in London showed today. German exports in June gained, the Federal Statistics Office said yesterday.
“The U.K. numbers are positive and add to the evidence that Europe has turned a corner,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “The most recent data from Europe and China is improving the global growth outlook and that’s positive for crude prices.”
Egypt’s interim President Adly Mansour signaled yesterday that a crackdown may be imminent on two Cairo sit-ins staged by supporters of ousted President Mohamed Mursi. The crisis was triggered by the military’s July 3 removal of Mursi.
Crude dropped in the previous five sessions, the longest streak of declines since December. Prices fell amid concern the Federal Reserve will curb $85 billion a month in bond purchases that have stimulated growth. WTI will probably retreat next week, according to a Bloomberg survey of analysts and traders.
WTI may resume its decline after dropping below key technical support levels yesterday, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York.
The contract broke below $102.96, the 38.2 percent Fibonacci retracement level on a chart from a June 24 low of $92.67 to the high on July 19. The 50 percent retracement level is $101 and 50-day moving average is $101.02.
“I wouldn’t be surprised if the market soon moved lower because of technical factors,” Yawger said. “I’m looking at $101, where there is major support because both the 50 percent retracement and 50-day moving average are there. We may be seeing some strength today because we fell so far so fast.”
Implied volatility for at-the-money WTI options expiring in October was 21.6 percent, up from 21.2 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 598,728 contracts as of 3:27 p.m. It totaled 694,391 contracts yesterday, 6.1 percent above the three-month average. Open interest was a record 1.9 million contracts.