10 April 2013, News Wires – Brent crude futures steadied above $106 per barrel on Wednesday after China’s total imports surged in March, suggesting that the recovery in the world’s second largest oil consumer was strengthening.
Chinese imports grew 14.1% in March, while exports grew 10%, relieving concerns over the subdued import growth of previous months. Crude imports slipped 2.1% from a year ago, in line with market expectations.
“The trade numbers bode well for the global economy; the drop in crude imports doesn’t really change the overall picture,” said Tony Nunan, an oil risk manager at Mitsubishi Corporation in Tokyo.
“The oil markets are struggling and looking for support, and this should keep them supported for now.”
Geopolitical concerns also kept oil prices supported, especially simmering tension in Iran and North Korea.
Front month Brent futures added 1 cent to stand at $106.24 per barrel early on Wednesday, after posting their biggest gain since December in the previous session.
US crude fell 33 cents to $93.87 per barrel after inventory data showed crude stockpiles rose by a larger than expected 5.1 million barrels, compared with analyst expectations of a 1.5 million barrel rise.
Brent could slip back to $105.38 per barrel after hitting resistance at $106.60, according to Reuters technical analyst Wang Tao
Analysts said the accelerating restocking process in some industries and a favourable base effect from a year ago may have flattered China’s March imports, which otherwise remain constrained by falling global commodity prices and a slower-than-expected upturn in investment demand.
Export growth in coming months may not be able to stay at the pace seen in January and February, even if the recovering global economy continues to bolster demand for goods from Chinese factories, they added.
The data mitigates some of the weak sentiment that has been plaguing the markets ever since the US Labor Department said on Friday that employers added 88,000 jobs outside farming, less than half the analyst forecast of a 200,000 increase.
“Oil futures are under some downward pressure and some of the recent economic data, such as US jobs, is indicating that the US economic recovery is still slow,” said Victor Shum, a senior partner at Purvin & Gertz in Singapore.
So, “traders will continue to look for signals out of China to see if the growth momentum is intact.”
One such signal came from China’s inflation numbers on Tuesday, which showed a slower rate of price increase, allaying concerns of policy tightening that could derail growth in the short-term.
Diplomatic worries over Korea and Iran also contributed to keeping prices firm.
Tension in the Korean peninsula escalated after North Korea moved one long-range missile in readiness for a possible launch and South Korea said it had raised its surveillance.
Iran, which is engaged in a dispute with Western nations over its nuclear programme, said it had begun operations at two uranium mines and a milling plant after weekend talks to resolve the dispute ended in stalemate.