Crude oil gains on China central bank credit action; upgraded demand forecast
The price of oil rose Tuesday after China's central bank injected credit into its financial system to offset concerns about slower economic growth and experts raised their forecast for global crude demand.
West Texas Intermediate crude for February delivery rose 62 cents to close US$94.99 a barrel on the New York Mercantile Exchange. The February contract expires later Tuesday and most trading has moved to the March contract, which was up 38 cents at US$94.97.
Meanwhile, natural gas futures rose 11 cents, or 2.5 per cent, to US$4.43 per thousand cubic feet as a swirling snowstorm clobbered the U.S. mid-Atlantic region and the Northeast on Tuesday.
The continued cold weather means greater demand for natural gas to keep homes warm.
Meanwhile, the Chinese central bank announced late in the day it would inject additional money into the financial system, reducing fears of a credit squeeze. That helped to offset lingering concerns after Monday's report of slowing economic growth in China.
Also, the International Energy Agency raised its demand forecast for 2014 by 90,000 barrels a day and now sees global appetite for crude reaching 92.5 million barrels a day.
Though it remains fragile, demand from Western industrialized countries is set to rise for the first time since 2010, the Paris-based IEA said, while also noting that domestic crude production in the United States in 2013 was 990,000 barrels a day higher than a year earlier.
This increase was "one of the largest annual gains on record for any country" and helped offset the impact of supply declines at other sources, like Libya and Iran, the IEA said.
"Global oil demand growth appears to have gradually gained momentum in the last 18 months, driven by economic recovery in the developed world," the IEA said in its monthly report on the oil market.
Brent crude, used to set prices for international varieties of crude, gained 38 cents to US$106.73 on the ICE exchange in London.
In other energy futures trading on Nymex, wholesale gasoline was flat at US$2.62 a U.S. gallon (3.79 litres) and heating oil fell one cent to US$3.01 a gallon.
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