Sun, Dec 14, 2003 - Page 10 News List

World oil prices climb as demand in China grows

AFP , NEW YORK

World oil prices surged Friday as traders braced for higher demand in the northern hemisphere winter and against the background of strong Chinese demand.

New York's benchmark light sweet crude contract for delivery in January raced US$1.19 higher to US$33.04 a barrel, the highest finish since Nov. 18.

Brent North Sea crude oil for January delivery gained 80 cents to 30.37 dollars.

"There are concerns about the cold weather coming. There are weather forecasts saying it will be cold all the way through the Christmas Holiday," said Refco market analyst Marshall Steeves.

Fimat analyst Mike Fitzpatrick said the New York oil contract price had breezed through a tough resistance level of US$33 because of stronger than expected demand.

"We passed it (US$33) very easily today," he said.

GNI trader Kevin Blemkin in London agreed.

"Prices are stronger on the back of the fact that the US is heading for another wave of cold weather. The products are once again going to support the market," he added, referring to heating oils and other distillate fuels.

The International Energy Agency (IEA) warned this week that China was struggling to satisfy booming energy consumption, which is overloading the country's infrastructure and straining global supplies.

Chinese demand for oil had surged by 11.5 percent in October from the figure for October last year to 5.8 million barrels per day (bpd), the IEA said in its monthly report.

Chinese energy demand was having a widespread effect on prices, distorting international demand for coal and pushing up ship freight rates.

Some fuel shortages had occurred in China resulting in rationing and the government had diverted fuel supplies from the north of the country to more sensitive areas, the IEA reported.

The forecast for China had been increased by 130,000 bpd in the fourth quarter to account for a switch from other forms of energy to oil.

"Chinese apparent oil demand continues to advance at a breakneck pace," the report said.

"Looking forward, it seems clear that China's economic growth, fuelled at once by aggressive government infrastructure programs, increased consumer spending and robust export demand, will continue to support rapid oil demand growth next year.

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