Oil rises above $74 on China exports

By Gene Ramos

NEW YORK (BestGrowthStock) – 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. (.EU: )

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.(EIA/S: )

Crude futures weakened in post-settlement trading, after Wall Street closed lower, dragged down by BP (BP.L: ) and other energy shares as the U.S. probe of the oil in the Gulf of Mexico intensified. (.N: )

At the close of electronic trading in New York, U.S. crude for July delivery last traded at $73.90 a barrel, paring gains to $1.91. It had settled in regular hours at $74.38 a barrel, gaining $2.39, off earlier highs of $74.96.

July ICE Brent last traded up $1.50 at $73.80, after having settled at $74.27 a barrel, up $1.97.

Markets also got a lift after U.S. Federal Reserve Chairman Ben Bernanke said the economic recovery appeared to be on solid footing and while a double-dip recession “can never be entirely ruled out,” he expects the economy to continue growing.

EIA REPORT

The EIA report also showed a 1.6 percent rise in U.S. refinery utilization to 89.1 percent and a decline of 500,000 barrels in crude oil stocks at Cushing, Oklahoma, the physical delivery point for U.S. crude futures.

The stock draw in Cushing, which has been holding near record levels in recent weeks and depressing the front-end of the U.S. oil futures curve, helped push up July U.S. crude compared with later months.

“This was a mixed picture, with the sharper than expected draw in crude inventories and larger than expected builds in products,” said Mike Zarembski, senior commodities analyst for optionsXpress in Chicago.

“The draw down in Cushing was a bit of a surprise, narrowing the contango, with July gaining on the back months today,” he added.

The overall EIA crude stock draw, however, was much smaller than the 4.5 million barrel drawdown reported by the API after the market closed on Tuesday.

The Organization of the Petroleum Exporting Countries gave its verdict on the oil market in its monthly report and revised down its 2010 global oil demand forecast by 10,000 barrels per day to 940,000 bpd.

BP said in its annual Statistical Review of World Energy, released on Wednesday, that world oil demand fell 1.2 million barrels per day in 2009, the second consecutive annual decline and the largest drop in volume since 1982.

But demand in Asia is still robust and many analysts expect consumption in countries such as China and India to bolster global energy markets in future.

Chinese trade data for May, including oil statistics, will be published on Thursday, followed by industrial production for the same month on Friday, with growth forecast at 17.1 percent in a Reuters survey, down from a 17.8 percent gain in April.

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(Additional reporting by Rebekah Kebede and Matthew Robinson in New York, Christopher Johnson in London; and Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)

Oil rises above $74 on China exports