NEW YORK (Reuters) - Brent reached its highest in more than five weeks on Tuesday and U.S. crude rose more than 2 percent as data from China and the United States eased concerns about the global economy and the threat to oil demand.
China’s industrial output in May beat market expectations with a 13.3 percent jump from a year earlier, though it slipped slightly from April. Inflation hit a 34-month high of 5.5 percent, but investors shrugged off another bank reserve hike by China’s central bank.
While U.S. retail sales fell in May for the first time in 11 months, the slip was less than expected. Producer prices rose less than expected, braking sharply from April.
Brent outpaced its U.S. counterpart in early trading and pushed the discount to Brent to a record above $22 a barrel, before reversing. Sweet crude supply disruptions in Libya and Nigeria and tight North Sea cargo availabilities have helped keep Brent elevated.
Brent crude for July delivery rose $1.06 to settle at $120.16 a barrel, its highest close since May 4, the day before it sank more than $10 in an unprecedented correction.
U.S. July crude gained $2.07 to settle at $99.37 a barrel, rebounding from an early $96.51 low.
“There’s a feeling that U.S. economic data will start to get better next month, and if you look at the retail sales data, if you take (out) autos, which were hit by the earthquake in Japan, they were actually up 0.3 percent,” said Amrita Sen, oil analyst at Barclays Capital.
Adding to the positive sentiment in oil markets, the economic reports helped lift U.S. stocks more than 1 percent, drawing investors into an equities market that has had six straight weekly declines.
A weak dollar .DXY also lent support to dollar-denominated oil prices as the euro and high-yielding currencies were boosted by improved risk appetite after the Chinese data eased global growth concerns.
“Today’s sharp price advance appeared heavily influenced by financial drivers that included a further weakening in the dollar and pop of almost 1-1/2 percent in the (Dow Industrials),” Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
U.S. gasoline futures rallied back above $3 a gallon and heating oil futures also settled higher.
Lower retail gasoline prices attracted buyers in the United States, pushing demand up last week compared to the previous week and the year-ago period, according to a report from MasterCard.
CHINA‘S OIL DEMAND
China’s implied oil demand in May topped the 9 million barrel-per-day mark for the seventh consecutive month, taken as another signal that a tap on the economic brake by authorities had not hurt demand for petroleum.
But Reuters calculations based on preliminary government data did show that while May oil demand was up versus the year-ago period, the growth rate slowed to its lowest since October and demand slipped slightly from April.
Copper prices rose to their highest in a week after the U.S. data consolidated gains made on the reports from China.
Oil investors will turn their focus later on Tuesday to the first of two weekly reports on U.S. oil inventories.
Crude stocks were expected to have fallen 1.5 million barrels last week on reduced imports and more refinery use encouraged by healthy crack spreads, or profit margins, according to a Reuters survey of analysts.
Total distillate stocks and gasoline inventories were expected to have increased by 1 million barrels.
A report from the industry group American Petroleum Institute is due at 4:30 p.m. EDT (2030 GMT), with the government’s report to follow on Wednesday morning.
Additional reporting by Gene Ramos in New York and Simon Falush and Barbara Lewis in London and Alejandro Barbajosa in Singapore; Editing by Dale Hudson, David Gregorio and Sofina Mirza-Reid