Oil rebounded towards $43 a barrel today after a 10 per cent fall in the past two sessions as faint signs of recovery showed through the latest Chinese data and traders positioned for the weekend Opec meeting.
US light crude for April delivery rose 50 cents to $42.83 a barrel by 0650 GMT after falling more than 7 per cent yesterday, when a bigger than expected US crude oil build and a slump in Chinese imports triggered a wave of selling. London Brent crude gained 70 cents to $42.10.
While the latest figures from China showed industrial output growth ground almost to a standstill at the start of the year, data showing a continued surge in bank lending in February fed optimism that activity could soon rebound.
Showing similarly mixed signals, China's daily refinery output fell 2.3 per cent in February from a year ago, but production improved after January's steep 9.4 per cent drop, and hit a four-month high.
Demand issues have moved to the front as the global economic slowdown has slowed consumption and sent oil prices off peaks over $147 a barrel hit in July, prompting the Organisation of the Petroleum Exporting Countries (Opec) to cut supplies by 4.2 million barrels per day since September.
The group meets on Sunday, with some members calling for another output cut and others insisting greater compliance with current agreements is needed.
Saudi Arabia, the biggest and most influential of the 12-member group, is among those which believe it is too soon to agree new output targets, sources have said.
Signs of still slow demand in the US sent prices down 7 per cent yesterday after weekly stocks data released by the US Energy Information Administration (EIA) showed a larger-than-expected 700,000 barrel build in crude inventories together with a large 2.1 million barrel rise in distillates stocks.
The market downplayed a bullish 3 million barrel draw in gasoline stocks as demand for the product was off on the week, even though demand for the past four weeks was at 9.02 million barrels per day, up 1.6 per cent from a year ago.
The data, coming after the EIA revised down its demand forecast again a day before for the 11th time in 14 monthly report, compounded the bearish sentiment after Chinese customs data showed a large 15 per cent fall in crude imports in February.
Reuters