01/10/2012 05:52 EST | Updated 03/11/2012 05:12 EDT

Crude prices higher as China oil imports increase

NEW YORK, N.Y. - Oil prices climbed Tuesday on expectations that China's economy — and its appetite for petroleum — will continue to grow in 2012.

Benchmark West Texas Intermediate crude rose by 93 cents to finish at US$102.24 a barrel in New York. Brent crude, used to price oil varieties imported by U.S. refineries, rose 83 cents to end at US$113.28 a barrel in London.

Prices rose after China said oil imports grew six per cent in December compared with a year earlier. China is the world's second-biggest oil consumer behind the United States. Strong demand for oil in China will likely help support higher global crude prices in 2012.

Manufacturers are looking to China and other emerging economies for strong growth this year. Aluminum maker Alcoa on Monday was the first major U.S. company to report fourth-quarter earnings. Although it posted a loss, Alcoa offered a bullish outlook for the year, expecting strong demand from China.

Energy commodities and stock markets are "being turbocharged by U.S. economic optimism," independent analyst Jim Ritterbusch said.

Investors were also reassured about measures to address Europe's debt problems after credit ratings agency Fitch Ratings said it won't downgrade France this year. A downgrade would have made it more expensive for France to raise cash to deal with the crisis.

Elsewhere, the security of world oil supplies remained a major concern for oil traders.

Nigeria, a top oil supplier to the United States, has been embroiled in widespread protests and violence following the government's decision to end subsidies, more than doubling the price of gasoline. Nigeria exported about 857,000 barrels a day to the U.S. in 2011, supplying nearly five per cent of the country's demand, according to the Energy Information Administration.

Iran still threatens to close the Strait of Hormuz in the Persian Gulf if the U.S. and other countries impose more sanctions in response to its nuclear program. Although experts doubt Iran could attempt a blockade without swift military intervention from the U.S., any supply shortages this year would further squeeze oil markets at a time when they're already falling behind world demand.

The EIA said Tuesday that it expects the U.S. and other countries will be forced to dip deeper into spare petroleum supplies later this year. EIA's monthly outlook predicted that world demand will grow by 1.5 per cent this year and by another 1.7 per cent in 2013.

EIA predicted that oil prices will rise to an average of US$100.25 a barrel this year and to US$103.75 in 2013.

In other energy trading in New York, natural gas prices fell seven cents to finish at US$2.94 per 1,000 cubic feet. Prices have declined this year as analysts predict that U.S. supplies will be more than ample after a mild winter that's cut into heating demand.

Natural gas is beginning 2012 at the cheapest level in a decade and Bank of America Merrill Lynch analysts cut their price forecasts for natural gas by $1 to an average of US$3.30 per 1,000 cubic feet in 2012.

"As a result of a warm winter and rampant production growth, we are now starting the new gas year with historically high storage levels and an incredible supply glut," Bank of America analyst Sabine Schels said.

Heating oil rose by three cents to end at US$3.10 a U.S. gallon (3.79 litres) and gasoline futures rose one cent to finish at US$2.77 a gallon.