Light oil price steady at $78 range, eyes on China

Published on January 21, 2010 by oilprices · No Comments

US Light oil price is trading steady around the $78 mark in Asia Thursday, recovering only a sliver of the ground lost overnight on pervasive concerns that monetary tightening in China will slow its economy.

Prices gained a few cents after China reported December industrial production up 18.5% from a year earlier, but investors weren’t ready to reverse the broad sell-off that has hit commodities this week.

“Possible Chinese economic policy shifts appear to be dislodging some fund long positions from the market,” said Jim Ritterbusch at Ritterbusch & Associates.

NYMEX, Light sweet crude oil futures for delivery in March traded at $78.04 a barrel at 0726 GMT, up 30 cents in the Globex electronic session, while in London, Brent crude oil futures on London’s ICE Futures Exchange was up 11 cents at $76.43 a barrel.

While talk of tighter monetary policy continues to spook the market, there are no obvious signs China’s thirst for oil is abating. Data issued Thursday show that China crude runs hit a record in December as Beijing urged refiners to raise output in order to meet strong winter demand. This year will be another record year for crude runs as new China Petrochemical Corp. refineries at Tianjin, Qingdao and Fujian ramp up output, while PetroChina’s 208,000-barrel-a-day Qinzhou refinery will start commercial production in June.

The stronger dollar is also weighing on oil prices, FOREX.com analyst Jane Foley said. “The rise in the U.S. dollar can also be linked to China insofar as risk appetite has been reined in, and the dollar and the Japanese yen have benefited from their safe-haven status,” she said.

Oil market participants are looking ahead to the US Department of Energy inventories data expected at 1600 GMT.