Crude Oil Trades Above $79 as China Increases Net Imports

Nov. 12 (Bloomberg) -- Oil traded above $79 a barrel in New York as Chinese crude imports climbed in October to the second- highest level ever as increased production spurred fuel demand.

Oil gained as much as 1.3 percent yesterday as China’s industrial output expanded last month, signaling a strengthening recovery in the world’s second-biggest oil-consuming country. Net oil imports were almost 19 million tons, or 4.5 million barrels a day, according to the Beijing-based customs office.

“It’s a market that is just really waiting to move higher,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, in a Bloomberg Television interview. If oil can break through $80 “then there are enough positive fundamentals that could see it trade upwards and onwards through to $85.”

Crude oil for December delivery traded at $79.52, up 30 cents, in electronic trading on the New York Mercantile Exchange at 12:07 a.m. Sydney time. Yesterday, the contract gained 23 cents to settle at $79.28. Prices have gained 78 percent since the start of the year.

The dollar traded at $1.5004 per euro at 11:53 a.m. in Sydney, from $1.4987 yesterday. A weaker dollar increases the appeal of commodities as an alternative investment.

“If the U.S. dollar continues to weaken that’ll certainly help commodities, in particular oil,” Barratt said.

Crude Stockpiles

The U.S. Energy Department will publish its weekly inventory report today. Crude-oil stockpiles probably rose 1 million barrels last week as imports increased, according to the median of 16 responses from analysts surveyed by Bloomberg News.

A Nov. 10 report from the American Petroleum Institute showed crude oil supplies rose 1.22 million barrels last week to 337.5 million.

The Energy Department report will probably show that gasoline supplies declined 350,000 barrels, according to the survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, may have slipped 700,000 barrels.

China’s net imports in October were the highest since July’s record 19.2 million barrels. China and the U.S. are responsible for 33 percent of global oil consumption, according to BP Plc.

The Standard & Poor’s 500 Index increased 0.5 percent to 1,098.51 in New York yesterday, its highest close since Oct. 3, 2008. The Dow Jones Industrial Average added 44.29 points, or 0.4 percent, to 10,291.26. Australia’s benchmark S&P/ASX 200 Index gained 0.6 percent at 11:47 a.m. in Sydney.

Brent crude for December settlement advanced 45 cents, or 0.6 percent, to end the session at $77.95 a barrel on the London-based ICE Futures Europe exchange yesterday.