Oil Rises After Dollar Weakens, China Increases Crude Import

April 12 - Oil rose for the first time in four days as the dollar fell and the euro gained after European governments offered debt-burdened Greece a rescue package and China increased crude imports to meet surging demand. Oil advanced as the weaker dollar bolstered the appeal of commodities as an alternative investment. Greece was offered as much as 45 billion euros ($61 billion) at below-market interest rates to end its fiscal crisis. China increased March crude oil imports by 29 percent from a year earlier, according to customs data released April 10. “China is playing a key role in underpinning global demand for commodities, including crude,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “The Greek rescue plan, which is going to be driving the markets today, resolves a lot of the uncertainty. A weaker dollar is a supportive element for oil prices.” Crude oil for May delivery gained as much as 79 cents, or 0.9 percent, to $85.71 a barrel and was at $85.38 in electronic trading on the New York Mercantile Exchange at 12:57 p.m. Singapore time. The contract dropped 47 cents, or 0.6 percent, to $84.92 on April 9. Crude imports by China reached 21.1 million metric tons, or about 4.98 million barrels a day, preliminary data released by the General Administration of Customs showed. Net imports reached 20.8 million tons, second only to December’s record 20.9 million tons. “China is continuing to grow at a strong rate,” CWA’s Hassall said. Weaker Dollar Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said yesterday they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That’s less than the current three- year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund. The dollar traded at $1.3687 per euro at 12:57 p.m. Singapore time, down from $1.3500 on April 9. U.S. stockpiles of crude oil rose 1.98 million barrels to 356.2 million, leaving supplies 7.1 percent above the five-year average for the period, according to an Energy Department report on April 7. Total U.S. fuel consumption slipped 0.6 percent to 18.9 million barrels a day, the report showed. “We’re still not seeing a tight market there in the U.S., but the macro data that we’ve seen certainly suggests a recovery is in place,” CWA’s Hassall said. “It looks like it will be a slow recovery.” $80-90 Range Crude oil has moved higher into the $80-to-$90 range from $70-to-$80 as prices catch up with the economic recovery, said Barclays Capital analysts in a April 9 research note. “This is now quite definitely a $80 to $90 per barrel world, and within that world, $90 may well prove to be a relatively elastic upper bound,” said analysts led by Paul Horsnell. “Prices are actually only now catching up with economic developments that have already happened, rather than being reliant on any over-optimistic stance about the future of the global economy.” Brent crude oil for May settlement gained as much as 75 cents, or 0.9 percent, to $85.58 a barrel on the London-based ICE Futures Europe exchange, and was at $85.49 at 12:57 p.m. Singapore time. The contract rose 2 cents to end the session at $84.83 on April 9. The more actively traded June contract gained 64 cents to $86.28 a barrel.