West Texas Intermediate crude trimmed a second weekly decline after economic growth picked up for the first time in three quarters in China, the world’s second-largest oil user.
Futures advanced as much as 0.9 percent in New York, curbing this week’s loss to 0.5 percent, as China’s gross domestic product rose 2.2 percent from the previous quarter, compared with a projected 2.1 percent, and expanded 7.7 percent in the first nine months of the year. WTI may drop next week amid increasing inventories in the U.S., according to a Bloomberg News survey.
“There were concerns about whether the Chinese recovery is sustainable, and there are plenty of concerns still, but nonetheless these numbers are positive and supporting oil prices today,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research company in London.
WTI for November delivery increased as much as 87 cents to $101.54 a barrel in electronic trading on the New York Mercantile Exchange, and traded for $101.52 as of 12:41 p.m. London time. The contract fell $1.62, or 1.6 percent, to $100.67 yesterday, the lowest close since July 2. The volume of all futures traded was about 20 percent below the 100-day average.
Brent for December settlement advanced as much as $1.09, or 1 percent, to $110.20 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude was at a premium of $8.37 to WTI for the same month. The spread narrowed for a second day yesterday to $8.24.
Prices slipped earlier this week on speculation U.S. lawmakers would fail to reach a debt agreement. After last-minute negotiations, President Barack Obama signed a bill yesterday to reopen the government through Jan. 15 and extend its borrowing authority to Feb. 7.
Goldman Sachs Group Inc. maintained its forecast for the Brent-WTI spread to shrink to $5 a barrel toward the end of this year. Oil markets have been “myopic” in reacting to stockpile changes at Cushing, Oklahoma, Jeffrey Currie, Goldman’s head of commodities research, said in an e-mailed report today. The storage hub is the delivery point for WTI futures.
In China, industrial production increased by 10.2 percent in September from a year earlier, the statistics bureau report showed, matching the median forecast of 48 economists.
“Chinese data has been improving for a few months now as a result of easing actions taken earlier this year, but this is more about stabilizing the process of their attempts to engineer a soft landing, not the start of a new boom,” said Guy Wolf, global head of market analytics at Marex Spectron Group in London.
China accounts for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., the largest consumer, according to the International Energy Agency.
The industry-funded American Petroleum Industry reported a surge in U.S. crude inventories on Oct. 16. Twenty-three of 38 analysts and traders, or 61 percent, surveyed by Bloomberg forecast prices will decrease through Oct. 25. Ten respondents said there will be little change and five projected a gain.
The U.S. government will release inventory data for the week ended Oct. 11 on Oct. 21 at 10:30 a.m. Washington time, according to the Energy Information Administration.
Futures are trading near a technical indicator that supported prices from late April through June, according to data compiled by Bloomberg. On the weekly chart, WTI is above the middle Bollinger band at about $100.31 a barrel. Buy orders tend to be clustered close to chart-support levels.