Brent holds above $40 as some investors call bottom on oil rout

Wednesday, 9 March 2016 00:00 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Oil prices fell on Tuesday on weak Chinese trading data, but Brent remained over $40 a barrel after jumping to 2016 highs the previous day when producers announced talks to support the market and investors opened new bullish bets.

Brent crude futures LOCc1 managed to defend $40 per barrel, standing at $40.43 at 0742 GMT, down 41 cents from their last settlement. On Monday, the contract had surged over 5.5 percent in intra-day trading and has gained almost 50 percent from its 2016 lows on 20 January.

U.S. West Texas Intermediate (WTI) futures were at $37.51 a barrel, down 39 cents from their last close but over 40% up from their 2016 low on Feb. 11.

On the demand side, China’s crude imports jumped 19.1% between January and February to 31.80 million tons, or about eight million barrels per day, despite overall weak trading figures released on Tuesday.

“Higher ‘teapot’ (independent refinery) demand and stronger refining margins which encouraged higher refinery throughputs have contributed to increased imports. Falling domestic crude production is also supportive,” said Virendra Chauhan of Energy Aspects.

Despite strong oil demand, questions about the sustainability of growing consumption weighed on markets as China’s economic downturn saw its overall exports plummet by a quarter in February in the worst slump since 2009.

China’s vehicle sales, a key driver for gasoline demand, in February fell 3.7% from a year earlier to 1.37 million, data from China Passenger Car Association showed.

“This is really a poor start for trade this year,” said Zhang Yongjun, senior economist at the China Center for International Economic Exchanges.