Oil was steady above $82 today, poised for a second consecutive weekly increase, on views that energy demand would continue to grow despite any efforts by China to tighten monetary policy further on rising inflation.
Chinese crude imports soared to their second-highest daily average on record in February, customs data showed on Wednesday, a day before the government said consumer inflation soared to a 16-month high.
"By tightening they are lowering the probability that the economy overheats, and that gives you a more stable outlook for energy demand over coming years," said Ben Westmore, a commodities analyst at the National Australia Bank.
The front-m $83.03 a barrel on Wednesday, the highest level since January 11, when prices touched a 15-month peak of $83.95.
London ICE Brent for April gained 11 cents to $80.39.
China will find difficulty in striking the right balance between cooling lending while sustaining growth in the world's third-largest economy, a senior central bank official said in remarks published today.
The People's Bank of China has increased required reserves twice this year, and economists suspect a third rise is imminent.
"We don't see the tightening as a big threat to economic activity in China," Westmore said.
"They are trying to put the economy on a more sustainable growth path. Authorities are confident enough about the stability of demand that they feel they can tighten."
The Organization of the Petroleum Exporting Countries (Opec), which pumps at least one in every three barrels of oil, meets in Vienna on March 17 to discuss production policy. Officials have said they do not expect a change in targets while prices are within their desired range.
"To a large extent, all Opec ministers need to do at this juncture is maintain the current policy stance, and to float along with the positive and improving data flow," Barclays Capital analysts headed by Paul Horsnell said in a weekly report.
The International Energy Agency, an adviser to industrialised nations on energy policy, will publish its monthly oil market report at 9am. Investors closely follow the agency's demand forecasts.
Opec has restricted output since the onset of the financial crisis in a bid to support prices. But the group's compliance with its officially targeted cut of 4.2 million barrels per day (bpd) has slipped to just 53 per cent as prices have risen.
The dollar was slightly softer against a basket of currencies today, after mixed data on US trade and jobless claims signalled the economy was improving at a slow pace.
White House economic adviser Larry Summers said yesterday the United States was "very close" to the point where job growth can begin.
The dollar is up almost 8 per cent since the end of November, boosting the purchasing power of oil exporters, including Opec members. A weaker dollar usually supports oil prices as it makes dollar-denominated commodities less expensive for holders of other currencies.
The US trade deficit narrowed unexpectedly in January as oil imports fell to their lowest since February 1999, a government report showed yesterday. US exports fell, but not as much as the oil-led drop in imports.
Reuters