LONDON (Reuters) – Oil prices rose again on Thursday, returning near to record highs, after a sharp fall in U.S. crude and fuel stocks and bullish Chinese economic data, brought fundamentals in the world’s top two oil consumers back to the fore.
U.S. crude was up 50 cents to $111.37 a barrel by 12:50 p.m., having earlier risen to one cent of the $112.21 record hit in the previous session.
London Brent crude was up 58 cents at $109.05 a barrel, having set a new record at $109.98.
Saudi Oil Minister Ali al-Naimi told reporters in Paris the market was still well supplied and record prices were not related to any lack of oil.
“I am not going to pull back. I’m not going to dump crude on the market,” Naimi said when asked whether Saudi Arabia might change its output.
Despite pleas by consuming nations for OPEC to raise oil production to help cap rising oil prices, its members insist the markets remain well supplied.
Adding to the bullish brew on Thursday, China revised up its 2007 GDP growth by 0.5 percent points to 11.9 percent and its currency traded at its strongest level against the dollar in over a decade, underlining China’s growing economic power and implying undimmed oil demand.
“The crude drop yesterday was a surprise. That is real fundamentals”, said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp..
“The Chinese data is bullish. There has not been any clear sign yet that Chinese demand has been hit by the troubles in the U.S.”, he said when asked about the significance of the latest data.
The acceleration in China’s currency strength is partly due to the dollar’s weakness in global markets, which has also helped propel oil prices to successive record highs this year.
Inventory data from the United States, the world’s largest oil consumer, pushed prices up to new records on Wednesday after it showed U.S. crude oil inventories fell 3.2 million barrels, countering earlier expectations for a build.
Gasoline and distillate stocks also fell by more than had been forecast.