Oil hits $72 after China growth

London: Oil rose to $72 per barrel Wednesday after news Chinese manufacturing growth accelerated last month, easing concerns over the pace of economic recovery.

Benchmark US crude oil futures for October rose for the first day this week, gaining 10 cents at $72.02 (Dh264.4) a barrel by 8.30am (GMT), after touching $71.53 on Tuesday, the lowest intraday price since August 25.

Markets rose Wednesday, while the dollar weakened 0.5 per cent against a basket of currencies.

"The Chinese manufacturing figures are relatively reassuring after some of the data we have had from the United States," Christophe Barret, global oil analyst at Credit Agricole, said.

"The data reinforce our view that we won't get a double dip recession but the return to growth will be slow and painful."

ICE Brent futures rose 16 cents to $74.80, extending their premium over US crude futures to more than $2.70 per barrel, the highest margin for more than three months.

Tighter supplies

North Sea crude oil prices are being supported by tighter supplies due to annual maintenance at oilfields and relatively high demand in Europe at a time of high US oil stocks.

Prices tumbled 3.7 per cent on Tuesday on signs that US stockpiles rose further last week and bad weather was set to suppress gasoline demand at the end of the driving season.

Appetite for raw materials was also depressed as the minutes of US Federal Reserve's latest meeting showed policy makers saw increasing risks to growth.

Oil fell more than $7 and almost nine per cent in August, its biggest monthly percentage loss since May, as the outlook for the US economy deteriorated.

Prices hit a 2010 low of $64.24 on May 20, the weakest front-month price since July 2009, after reaching the peak for this year at $87.15 on May 3.

US crude stockpiles jumped 4.8 million barrels last week, the American Petroleum Institute (API) said on Tuesday, more than four times the expected gain of 1.1 million barrels.

Stock drops

Drops in fuel stocks were smaller than the crude increase, at 589,000 barrels for gasoline and 1.9 million barrels for distillates including heating oil and diesel.

The Energy Information Administration (EIA) was due to publish government statistics on inventories and demand yesterday.

Expectations are for gasoline supplies to have declined 200,000 barrels and distillates to have gained 1.2 million in the week to August 27, a Reuters survey showed.