Oil holds above $104, helped by higher China imports

LONDON Wed May 8, 2013 2:52pm IST

A driver pumps petrol into his car at a petrol station in Brussels March 8, 2011. REUTERS/Yves Herman/Files

A driver pumps petrol into his car at a petrol station in Brussels March 8, 2011.

Credit: Reuters/Yves Herman/Files

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LONDON (Reuters) - Oil steadied above $104 a barrel on Wednesday after a rise in crude imports by the world's No.2 consumer, China, though concerns about global demand kept a lid on prices.

China's daily crude imports in April rose 3.7 percent from a year ago and 3.5 percent from March, customs data showed, as refiners took advantage of lower prices to replenish stocks.

The strong Chinese trade data pushed world shares to five-year highs and boosted other commodities despite doubts about the quality of the data.

Oil prices were however kept in check by the U.S. Energy Information Administration's (EIA) estimate of ample supplies in 2013 and 2014.

Brent slipped 14 cents to $104.26 a barrel by 0845 GMT, and off a low of $103.85 earlier in the day, after reaching its highest level in over a month on Tuesday. U.S. oil rose 4 cents to $95.66.

"We are lacking the catalyst in the numbers to suggest we could go back to the highs reached earlier this year," Olivier Jakob, analyst at Zug-based Petromatrix, said.

"The Chinese (crude imports) data is not a game changer. The first quarter was still slightly down from a year earlier and China is still importing less than expected," Jakob said.

WEAK OUTLOOK

Prices may stay under pressure, given projections of a well-supplied market and bleak global demand.

The EIA cut its forecast for demand growth for this year to 890,000 bpd and pared its 2014 estimate to 1.21 million bpd, or just over 2.1 million bpd demand growth over two years.

At the same time, the EIA sees supplies from countries outside the Organization of the Petroleum Exporting Countries growing by 1.11 million bpd in 2013 and by a further 1.77 million next year.

Further strengthening the global supply outlook, Sudan said on Tuesday it had received the first crude shipments from South Sudan since 2012.

In the near term, data from the American Petroleum Institute (API) showed U.S. crude inventories rose 680,000 barrels for the week to May 3, falling short of a Reuters poll forecast of an average increase of 1.9 million barrels.

Traders await EIA data later in the day to gauge the outlook for demand growth.

Concerns that Syria's civil war could deteriorate were eased after Russia and the United States announced plans to convene international talks to end the strife.

(Additional reporting by Manash Goswami in Singapore, Editing by Alison Birrane)

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