SINGAPORE (AP) — Oil prices hovered below $97 a barrel Wednesday in Asia as receding inflation in China added to expectations that the world’s second-largest economy can continue robust growth and strong demand for crude.
Benchmark crude for December delivery was down 13 cents at $96.67 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.28 to settle at $96.80 in New York on Tuesday.
Brent crude was up 57 cents at $115.57 a barrel on the ICE Futures Exchange in London.
China said Wednesday that consumer prices rose 5.5 percent from a year earlier, down from September’s 6.1 percent and a 37-month high of 6.5 percent in July.
Policymakers had raised lending rates in a bid to cool consumer demand and slow the economy, which grew 9.1 percent in the three months ended September, down from the previous quarter’s 9.5 percent.
“There is no need for further tightening,” said Citigroup, which forecast inflation will slow to below 5 percent by December. “Falling inflationary pressures give the government more flexibility to ease policies.”
A belief that the global economy is slowing less than previously forecast has helped fuel a 28 percent surge in crude since it dropped to $75 on Oct. 4.
Concern about a possible conflict with Iran over its nuclear power program also helped support prices. Iran, the world’s fourth-largest oil exporter, is suspected of developing nuclear weapons, according to a United Nations report released Tuesday. Its nuclear program could lead to international trade sanctions, and Israel has threatened military action.
“Disruptions to Iranian supply would drive oil prices significantly higher,” Morgan Stanley said in a report.
Traders are also closely watching the latest U.S. crude inventory figures. The American Petroleum Institute said late Tuesday that crude inventories rose 148,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1 million barrels.
Inventories of gasoline fell 1.5 million barrels last week while distillates dropped 2.9 million barrels, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.
In other Nymex trading, heating oil rose 0.9 cent to $3.13 per gallon and gasoline futures added 0.9 cents to $2.72 per gallon. Natural gas slid 1.3 cents at $3.73 per 1,000 cubic feet.