Wednesday, June 9, 2010

Oil Rises Along With Chinese Exports

Oil settled more than 3 percent higher to top $74 on Wednesday after a report of buoyant Chinese exports eased concerns over the pace of growth in the world's No. 2 oil consumer and data showed a drawdown in U.S. crude inventories.

Chinese exports grew about 50 percent from a year earlier in May, sources told Reuters on Wednesday, in a sign the economy of the second-largest oil user was roaring ahead.
The export figure in the Reuters report, which came ahead of Thursday's official release, far exceeded expectations and fueled a rise in stock markets globally.

Further support came after the U.S. Energy Information Administration reported a 1.8 million barrel drop in crude inventories, confirming an earlier report by the American Petroleum Institute of a hefty crude draw.

U.S. crude for July delivery settled at $74.38 a barrel, up $2.39, off earlier highs of $74.96.

July ICE Brent settled at $74.27 a barrel, up $1.97

China’s economic growth remains strong and is a significant factor in determining oil prices. Demand from China and the US may be key in determining oil prices this summer. However, it is important to note that factors from the supply-side are equally important. OPEC recently lowered is estimates for world oil demand in 2010 and has refrained from changing its output quotas. Currently, OPEC members are supplying more than the set quota.

Daniel A.
Summer Analyst
Analyze Capital LLC

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