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Crude above $90 on China growth vow but US and eurozone continue to weigh
Premier Wen Jiabao said on Tuesday ahead of the country`s annual parliamentary meetings that his country will boost fiscal spending to assure an economic growth of 7.5% this year, a 3.5% inflation target and add more than 9 million urban jobs.
China setting cheerful economic targets for 2013 eased concerns over the nation’s economic growth triggered by the weaker manufacturing and service sectors and the stricter measures imposed on the property market.
- Crude is trading as of this writing around the $30.35 a barrel level compared with the opening at $90.17, while the highest is at $90.43 and the lowest is at $90.10
Also helping crude to slightly rebound on Tuesday is the continued tensions in the Middle East and the North Sea Brent pipeline system which remained shut after a platform leak and there is no estimate date for when it will resume.
- Brent is trading as of this writing around the $110.45 a barrel after rising 0.33%
Crude dropped on Monday below $90 a barrel for the first time this year due to the fiscal crisis in the United States and the continuing political uncertainty in Italy amid signs he country could be edging towards another election within months.
Sentiment remain weak following the introduction of $85 billion in automatic government spending cuts in the United States, which could weaken the economic recovery and dent demand on fuel in the world’s largest oil consumer.
In the eurozone, the PMI data showed that activity in the manufacturing sector is weakening while the region`s sentiment tumbled in March, breaking a six-month trend of gains, darkening the prospects of the eurozone`s recovery.
Moreover, indicators that oil markets are amply supplied will keep gains limited on the short term. A survey last week showed that production from the Organization of the Petroleum Exporting Countries increased in February for the first time in four months.
Meanwhile, the U.S. Energy Information Administration reported last week that U.S. oil demand in 2012 was the lowest since 1996. Moreover, the API report later in the day might show crude inventories in the U.S. climbed last week for the seventh straight week.
Oil prices may continue to be vulnerable as investors will be watching the ECB and BoE, both meeting on Thursday to announce their monetary policy decisions, while the U.S. will release its jobs report on Friday.
- Natural gas is trading as of this writing at $3.571 per 1,000 cubic feet after rising 1.19%
- Heating oil is trading at $2.9262 a gallon after rising 0.24%
- Gasoline is trading as of this writing at $3.0982 a gallon after falling 0.01%