Oil prices rose midday on Tuesday amid stronger than expected data for China demand and a technical price recovery after weeks of uninterrupted selling.
Traders and analysts said that unflattering global economic data out of Europe and fears of oversupplied crude markets limited the gains.
Benchmark Brent crude gained 0.35 or 35 cents at $85.70 per barrel after rising more than 1% or $1 earlier to an $86.48 session high. The US West Texas intermediate (WTI) crude traded 0.2% or 20 cents at $82.91 per barrel after hitting an $84.05 session peak.
Reuters quoted Tradition Energy’s Gene Addison as having said, “Because of their deep slide over the past couple of weeks, oil prices are kind of overdone on the downside and vulnerable to turnarounds now.”
He added, “But whether we have hit bottom or not remains a question. I would think not given the market’s recent performance, the continued swoon of the European economies and the idea that we have more than ample supplies of oil sloshing around the world finding for a home.”
Data indicated that there was a 7.3% expansion in the China economy for Q3, above the forecasts, but this is the slowest pace since the global financial crisis, as reported by CNBC.
PVM Oil Associates analyst Tamas Varga as having said, “Oil is up in reaction to the Chinese demand figures. But this is a rally that should be sold into. The rise in implied Chinese oil demand may have more to do with filling stockpiles. Chinese companies have been buying crude oil because it has been cheap.”
Meanwhile, the International Energy Agency has slashed its global oil demand forecasts for 2015. Investment bank, Citigroup, cut its forecasts for US crude to $83 and $92 for Q4. The Organization of the Petroleum Exporting Countries (OPEC) is not likely to cut output ahead of the November 27 meeting, as indicated by some of its members.
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