Oil rises near $106 on strong China economic data
NEW YORK (AP) — The price of oil rose more than 2 percent Friday as positive economic news from China outweighed expectations that the U.S. Federal Reserve would soon start withdrawing its bond-buying program.
Benchmark crude for September delivery gained $2.57, or 2.5 percent, to close at $105.97 per barrel on the New York Mercantile Exchange. Oil still finished with a loss of 97 cents for the week.
Meanwhile, U.S. drivers are paying a nickel less on average at the gas pump than they were a week ago. The national average for a gallon of gasoline fell a penny overnight to $3.58. That’s the lowest average price since July 13.
China, the world’s No. 2 economy after the United States, reported Friday that July’s producer prices — the price of goods as they leave factories — fell less rapidly than a year earlier, a sign that demand may be improving. The official Xinhua News Agency said retail sales grew 13.2 percent in July from a year earlier, slightly down from June. Industrial production grew 9.7 percent, up from June’s 8.9 percent and the highest year-on-year growth in five months.
Even with Friday’s gain for oil, speculation still overhangs the market that the Fed will start phasing out measures that have kept long-term interest rates at record low levels.
The Fed’s policies have sparked investment in riskier assets such as stocks and oil. But comments from Fed officials this week indicate the central bank may be ready to begin reducing its monthly purchases of $85 billion in bonds as early as September.
“Until some clarity is seen next month with the Fed policy meeting, the market will continue to zig and zag off of latest comments from some of the Fed membership,” wrote Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.
Brent crude, traded on the ICE Futures exchange in London, rose $1.54 to $108.22 a barrel.
In other energy futures trading on Nymex:
— Heating oil rose 4 cents to $2.99 a gallon.
— Natural gas fell 7 cents to $3.23 per 1,000 cubic feet.
— Wholesale gasoline rose 5 cents to $2.91 a gallon.