Oil tops $94 after Saudi production cut, robust China export data


Oil tops $94 after Saudi production cut, robust China export data


SAN FRANCISCO -- Oil futures climbed above $94 a barrel Thursday, buoyed by data showing a surprisingly strong increase in China's exports at the end of 2012 and by a report that Saudi Arabia cut crude production in December.

The China exports data for December spurred investors' appetite for risk and the U.S. dollar weakened, providing additional support for oil prices. The February contract for light sweet crude (CLG3) climbed 91 cents, or 1%, to $94.01 a barrel on the New York Mercantile Exchange after touching a high of $94.70. Front-month crude contract prices haven't closed above $94 since mid-September.

The advance in oil Thursday came after official data released overnight showed China's exports beat expectations with a 14.1% year-on-year jump for December, boosting the nation's trade surplus to $31.6 billion.

China imported 23.67 million tons of crude in December, compared with 23.37 million tons the previous month, according to a Reuters report." A recovery in underlying demand and the addition of new capacity led to a rebound in imports" in the fourth quarter, Barclays analyst Sijin Cheng wrote in a note to clients.

However, the capacity additions during the month haven't yet led to a strong outflow of refined petroleum products from China, as "freezing weather in many parts of the country likely raised the need for fuel cover," Cheng added.

Meanwhile, Bloomberg News, citing a Gulf official with knowledge of Saudi Arabia's energy policy, reported Thursday that the kingdom cut its crude production by nearly 5% last month, to 9.025 million barrels a day -- the lowest in 19 months. The country is the world's top oil exporter.

"Although the [exports] data add credence to the case that China's economy is starting to pick up again, the expediency and size of the production cut by Saudi Arabia is really driving today's bullish tone," said Matt Smith, commodity analyst at Schneider ElectricIn London, Brent crude for February delivery tacked on 57 cents, or 0.5%, to $112.32 a barrel on ICE Futures.

A weaker dollar further lent support to oil prices Thursday. The ICE dollar index (DXY), which measures the greenback's moves against six major global currencies, fell to 80.024, down from 80.514 in late North American trading Wednesday. Dollar-denominated commodities tend to rise on signs of a softer U.S. currency, as they become cheaper for holders of other currencies.

The greenback lost ground against the euro, in particular, after European Central Bank President Mario Draghi said the decision to keep interest rates steady was unanimous, reducing expectations that a rate cut will be coming soon.

Meanwhile, natural gas looked to break a three-session decline after a bigger-than-expected draw in U.S. supplies. February natural gas added 7 cents, or 2.2%, to stand at $3.18 per million British thermal units.

The Energy Information Administration reported on Thursday a decline of 201 Bef in natural-gas inventories for the week ended Jan. 4, the EIA said.

Dow Jones Newswires

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