BUSINESS

Oil prices higher on expectations of rising demand after China reports strong growth

01/17/2012 08:39 EST | Updated 03/18/2012 05:12 EDT
NEW YORK, N.Y. - Oil prices rose Tuesday on signs that China, the world's second-largest economy, may avoid a significant slowdown.

Benchmark West Texas Intermediate crude rose $2.01, or two per cent, to finish at US$100.71 a barrel in New York. Brent crude, used to price many varieties imported by U.S. refineries, rose 19 cents to end at US$111.53 a barrel in London.

China said its economy grew by 8.9 per cent in the fourth quarter, which was slower than the previous quarter. Experts say that level is still robust as retail and factory production improved in December.

Oil demand increased 1.4 per cent in the fourth quarter from a year ago and was up 6.4 per cent in 2011 from 2010, according to data cited by Barclays Capital.

China is the world's second-largest oil consumer after the United States. It is also one of the biggest importers of commodities and raw materials, so its economic growth can affect countries that provide crude oil and raw materials such as iron ore, copper and soybeans.

China's growth slowed last year as the government imposed a number of measures to control inflation and prevent the economy from overheating.

In other New York Mercantile Exchange trading, U.S. natural gas prices were at a 10-year low as mild winter weather in many parts of the North America kept thermostats turned down.

The U.S. National Weather Service and other forecasters see above-average temperatures persisting for at least the next few weeks and U.S. nation's natural gas supplies remain well above the five-year average.

Natural gas fell 18 cents, or 6.8 per cent to US$2.49 per 1,000 cubic feet in New York. That price is down 17 per cent for the month and 45 per cent lower than a year ago.

In other trading, heating oil rose about a penny to US$3.04 a U.S. gallon (3.79 litres) and gasoline futures rose four cents to US$2.77 a gallon.

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