Brent futures rose towards $118 per barrel this morning, heading for a fourth weekly gain as robust trade data from China bolstered the outlook for demand, while escalating tensions in the Middle East stoked concerns over supply.
China's January exports and imports beat forecasts, adding to evidence of a rebound in the world's No.2 oil consumer, although analysts remain cautious as the economy last year grew at its slowest pace since 1999.
A rise in China's crude oil imports to their third highest daily rate on record in January also buoyed prices.
Front-month Brent futures rose 56 cents per barrel to $117.80 at 0628 GMT. US crude added 31 cents to $96.14, but is still heading for its first loss in nine weeks.
"We have been seeing strong economic numbers ... (and this trend) is going to underpin the oil markets for some time," said Ben le Brun, market analyst at OptionsXpress in Sydney.
The other supporting factor will be tensions in the Middle East and worries about oil supply from the region.
Fiery rhetoric by Iran's supreme leader, Ayatollah Ali Khamenei, rejecting a US offer for bilateral talks added to concern that the biggest risk factor for oil markets will not be resolved soon.
"It does not look like the tensions with Iran are going to dissipate anytime soon. They are going to be bubbling under the surface, which will keep a floor under the oil price," le Brun said.
Currently US-Iran contact is limited to talks between Tehran and a so-called P5+1 group of powers on Iran's disputed nuclear programme that are to resume on February 26 in Kazakhstan.
Adding to supply concerns is the instability in Tunisia, located between major oil producers Algeria and Libya, where the assassination of an opposition leader this week led to street riots and violence.
Brent's rally reflects "a tighter fundamental picture as demand prospects improved amidst optimism for global economic growth and on indications that Saudi oil production held steady in January," Deutsche Bank analysts said in a note.
Reuters
