The price of oil moved up to US$107 a barrel Tuesday as investors waited for the next U.S. report on crude and fuel inventories for confirmation that demand is increasing.
By early afternoon in Europe, benchmark crude for August delivery was up 69 cents at $107.01 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 37 cents to settle at $106.32 on Monday.
Oil is up about 10 per cent so far this month. It has been jolted higher by unexpectedly sharp drops in U.S. crude and gasoline inventories, which suggest stronger demand. The military ouster in early July of Egypt’s president has also added a premium to crude, reflecting the risk of supply disruption from political instability in a country that controls the Suez Canal.
Those factors were tempered Monday by a second straight quarter of slowing economic growth in China, whose economy expanded 7.5 per cent in the April-June quarter after 7.7 per cent growth in the previous quarter.
While U.S. retail sales figures were also generally weaker than expected in June, spending was relatively strong in sectors important to oil markets.
“June’s retail sales figures in the U.S. showed significant growth in car and gas station sales, which points to robust U.S. oil demand,” said a report from Commerzbank in Frankfurt. “This has prompted financial investors to bet increasingly on climbing prices, thereby reinforcing the trend.”
Investors will be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending July 12 is expected to show a draw of 2.5 million barrels in crude oil stocks and no change in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department’s Energy Information Administration — the market benchmark — will be out on Wednesday.
If the market forecast is confirmed, it could bolster the case of those traders and analysts who believe the oil price will rise further because U.S. energy demand is rising in step with faster hiring.
In London, Brent crude was up 35 cents to $109.44 a barrel on the ICE Futures exchange.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 1.41 cent to $3.0444 a gallon.
— Heating oil gained 2.01 cents to $3.0479 a gallon.
— Natural gas fell 1.2 cents to $3.662 per 1,000 cubic feet.