Oil prices trading higher on strong China data

Oil prices rose in trading on Friday, supported by solid industrial growth in China, after falling for a seventh straight trading session a day earlier on concerns over global oversupply, dipping below $70 for the first time in two months.

Signs that the US economy is on a steady growth track also offered some relief to oil even though the US dollar held steady.

US Light crude oil futures for January delivery edged up 23 cents to $70.77 a barrel by 0748 GMT (2:48 a.m. EST), after touching an intraday low of $69.81 on Thursday. Over the past seven sessions, front month crude has sunk by almost $8, or about 10 percent, the biggest loss for the front month since July.

Some analysts said the sharp drop in oil prices reflected growing pessimism about a potential recovery, but others pointed to support from Asia. “The current market is too pessimistic,” said Sumisho Sano, general manager for Research and SCM Securities in Tokyo. “The fundamentals are not so good in the United States, but China and Asia are not so bad, driven by industrial demand in the region.”

He expected oil prices to hold firm within the $65 to $80 range, down from the previous $75 to $80 range.

China’s November industrial output growth surged to its strongest since June 2007, underscoring the economy’s robust recovery from the global downturn in response to massive fiscal and monetary stimulus, and analysts expected the trend to continue in coming months.

Refining rates in the world’s second-largest oil user also posted a record high in November, up 21 percent from a year earlier to 8.12 million barrels per day (bpd), signaling recovering demand. But strong production also led to a build-up in fuel inventories in China’s two oil majors last month. Also while oil product exports rose, imports fell last month.

Tags:  China, oil prices, trading session, US