Brent crude rose today after official data in China showed that demand has increased in the world’s second-largest oil consumer. However, early gains were restricted over worries related to the election in Italy, which ignited apprehensions that the eurozone crisis might be rekindled.
Brent crude increased by 1.5% to $115.87 a barrel, while US crude slipped by two cents a barrel at $93.11, reported Reuters.
Chinese customs data showed that oil imports increased by more than seven percent in January from the same period in 2012, while China’s imports from Iran decreased by about a third, prompting fears of a tighter market.
In the beginning of 2013 strong growth in demand from China led to a $10 rise in Brent prices, which slipped by three percent last week after oil industry sources said that Saudi Arabia was planning to increase second quarter production.
On Tuesday, equity markets and the euro plunged in late afternoon trading in New York, on fears that Italy will fail to form a stable government – pulling down oil and other industrial commodities.
Three TV projections have suggested that Italy’s centre-left coalition holds a small lead over former prime minister Silvio Berlusconi’s centre-right bloc, in the election for the lower house of parliament.
It is anticipated that the latest deadlock in parliament may lead to fresh elections and create doubt that Italy will not succeed in paying down its debt and reignite the eurozone crisis.
On Tuesday oil traders will keep a close eye on the meeting in Kazakhstan between Iran and global powers, regarding Tehran’s controversial nuclear programme, as there are expectations that the long-running tensions with the OPEC member may come to an end. Oil prices also came under pressure over predictions for the sixth consecutive rise in US crude oil stocks last week.
A Reuters poll showed that crude stocks are expected to rise 2.3 million barrels in the week ending 22 February.
The American Petroleum Institute and the US Energy Information Administration are expected to release their respective data on Tuesday.
Distillate stocks were predicted to drop by one million barrels, while gasoline stocks were expected to have fallen by 400,000 barrels.
Image: Chinese customs data showed that oil imports increased. Photo courtesy of freedigitalphotos.net / domdeen.