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Oil rises above $101 in Europe amid positive economic news from China, worries about Iran
Oil advanced above $101 a barrel Wednesday, buoyed by positive economic data from China and continued concerns about diplomatic tensions with Iran and their potential effect on the flow of the region's oil exports.
By early afternoon in Europe, benchmark crude for February delivery was up 74 cents at $101.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $2.01 to finish at $100.71 on Tuesday.
In London, Brent crude was up 44 cents to $111.97 on the ICE Futures exchange.
China, the world's second largest economy, reported 8.9 percent growth in the fourth quarter, slower than the previous quarter but robust enough to indicate it would avoid an abrupt slowdown. Retail and factory production improved while oil demand was up 6.4 percent in 2011 from 2010, according to data cited by Barclays Capital.
Tension between Iran and Saudi Arabia, as well as a move by France to accelerate the EU's implementation of an embargo on Iranian oil export also supported prices, he said.
Saudi Oil Minister Ali al-Naimi has said Saudi Arabia wants to stabilize prices at $100 a barrel this year and was ready to pump more oil if needed. That came as Iran warned Gulf nations not to make up any shortfall and that it may shut the Strait of Hormuz which is used to transport about a fifth of the world's oil.
Iraq's oil minister, Abdul-Karim Elaibi, who is also the rotating president of OPEC, said he would travel to Iran on Thursday to convince Tehran to assure the world that the Islamic Republic will not close the Strait of Hormuz, the vital waterway through which about one-sixth of the world's oil flows.
A slower pace of oil demand growth forecast by the International Energy Agency helped cap gains.
The Paris-based IEA said global demand for crude would rise by 1.1 million barrels a day in 2012, while earlier it was expecting demand to increase by 1.3 million barrels a day.
The IEA also warned that the relatively narrow band in which oil prices have been moving lately was not necessarily a sign of market consistency.
"A sustained spell of oil price stability is often seen as a good thing," the IEA said in its monthly report on the oil market. "But if it derives from the 'rock' of potential economic slump on the one hand, and the 'hard place' of possible geopolitical turmoil on the other, that is scarcely a source of comfort."
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Jan. 13 is expected to show builds of 2.6 million barrels in crude oil stocks and of 3 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Wednesday, while the report from the Energy Department's Energy Information Administration ' the market benchmark ' will be out Thursday.
Both reports are being released a day later than usual because of Monday's Martin Luther King holiday.
In other energy trading, heating oil rose 0.16 cent to $3.0388 per gallon and gasoline futures rose 0.83 cent to $2.7796 per gallon. Natural gas advanced 2 cents to $2.508 per 1,000 cubic feet.
Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.