Jinping

Oil prices rallied on Wednesday with investors weighing heavily on Chinese faster growth, moving their focus from concentrating only on the economic uncertainty troubling the US.

Brent oil increased to more than $110 a barrel, while US crude surged 42 cents to $88.92, reports Reuters.

Investor focus moved on to the world’s second largest oil consumer, after China’s state television quoted Chinese Communist Party chief Xi Jinping as saying that the country plans to make new policies effective in 2013 with an increased focus on economic recovery.

The debt crisis in Europe and worsening economic conditions in the US in view of unaddressed financial woes remained key concerns for the global oil demand outlook, leading to an impact on price gains.

US lawmakers have been fighting over the looming fiscal cliff for several months without reaching any consensus to help the world’s top oil consumer from another recession.

Analysts expect that the global oil demand might be dropped by nearly 0.6 million barrels a day if the deal to avert the fiscal cliff is not agreed upon soon.

Supply worries continue to emanate from the Middle East region, which has been badly impacted by Egyptian political unrest and ongoing clashes between Iran and US.

Iran’s announcement on Tuesday that it captured a US intelligence drone in its airspace caused further concerns, though the US have denied this.

Oil prices gained support from the US crude stockpiles report by American Petroleum Institute, which showed that stockpiles declined by 2.2 million barrels during the week ending 30 November.

Investors now await the weekly data from the Energy Information Administration (EIA) later today.


Image: Investor focus moved to China after its Communist Party chief Xi Jinping talked about the country’s future economy recovery plans. Photo courtesy of US DoD, photo by Erin A. Kirk-Cuomo.