Oil near $87 even as Chinese growth slows
Oil rose to near $87 a barrel Friday even as economic growth in China, the world's second-largest crude consumer, slowed in the second quarter to a three-year low. The decline was in line with expectations.
By early afternoon in Europe, benchmark oil for August delivery was up 83 cents at $86.91 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 27 cents to settle at $86.08 on Thursday in New York.
In London, Brent crude for August delivery was up 90 cents at $101.97 per barrel on the ICE Futures exchange.
China said its gross domestic product expanded 7.6 percent in the April to June period from a year earlier, the lowest since 2009. China also reported that retail sales and factory output growth slowed in June.
"Given that the GDP number is controlled by the state, we are more worried about the data for power demand in China which in June is flat versus last year and comes after very weak numbers as well for April and May," said analyst Olivier Jakob of Petromatrix in Switzerland.
Crude has fallen from $106 in May amid signs of slowing economic growth in the U.S., Europe and China. Some analysts expect global policymakers to continue to ease monetary policy and boost fiscal spending, which should spur economic growth and oil demand.
"The likelihood of some stimulus measures keep the upside risk of the oil market tilted higher through month's end and possibly beyond," energy trader and consultant Ritterbusch and Associates said in a report.
Fresh U.S. sanctions against Iran aimed at stifling its nuclear program also helped support oil prices. The new sanctions announced Thursday were aimed at companies and people affiliated with Iran's defense ministry. Previous sanctions were meant to curtail its ability to export oil.
Earlier this year, European refineries stopped buying Iranian oil, and Iran's banks were blocked from doing business with much of the world.
The U.S. and other Western nations say Iran is building a nuclear weapon, which Iran denies. Its leaders have threatened to block a key shipping channel out of the Persian Gulf if the sanctions continue, a move that could slow down or even halt shipments of about 20 percent of global oil supply.
"As sanctions against Iran come into force, supply risks will gain more weight again," said analysts at Commerzbank in Frankfurt. "Supported by higher seasonal demand, we expect the price (of Brent) to climb to $110 a barrel by the end of the year."
Commerzbank said Iran's oil exports were expected to fall to a maximum of 1.1 million barrels a day in this month, about half of what it typically exported daily in 2011.
In other energy trading, heating oil was up 1.31 cents at $2.7864 per gallon and gasoline futures rose 0.97 cent to $2.8188 a gallon. Natural gas added 0.7 cent to $2.881 per 1,000 cubic feet.