By Ramya Venugopal
CHENNAI, India, April 10 (Reuters) - Brent crude futures
steadied around $106 per barrel on Wednesday after China's total
imports surged in March, suggesting that recovery in the world's
No 2 oil consumer is gathering momentum.
Chinese imports grew 14.1 percent in March, while exports
climbed 10 percent, relieving concerns over the subdued import
growth of previous months. Crude imports slipped 2.1 percent
from a year ago, in line with market expectations.
'The trade numbers bode well for the global economy; the
drop in crude imports doesn't really change the overall
picture,' said Tony Nunan, an oil risk manager at Mitsubishi
Corp in Tokyo.
'The oil markets are struggling and looking for support, and
this should keep them supported for now.'
Geopolitical concerns also bolstered oil prices, especially
simmering tensions in Iran and North Korea.
Front month Brent futures had slipped 20 cents to
$106.03 per barrel by 0655 GMT, after posting their biggest gain
since December in the previous session, helped by a weak dollar
and tame Chinese inflation data.
U.S. crude fell 43 cents to $93.87 per barrel after
inventory data showed crude increased by a larger-than-expected
5.1 million barrels, compared with analyst expectations for a
1.5 million-barrel rise.
Brent could slip back to $105.38 per barrel after hitting
resistance at $106.60, according to Reuters technical analyst
Some analysts said the accelerating restocking process in
some industries and a favourable base effect from a year ago may
have flattered China's March imports, which otherwise remain
constrained by falling global commodity prices and a
slower-than-expected upturn in investment demand.
Export growth in coming months may not be able to match the
pace of January and February, even if the recovering global
economy continues to bolster demand for goods from Chinese
factories, they added.
The annual dip in crude imports didn't surprise the market
as some state-run refineries started planned overhauls, and
crude runs at independent refineries also declined on poor
Chinese refineries processed close to 10 million bpd in the
first two months of the year, a level just a touch off the
record rate of 10.15 million bpd in December, as newly started
refining facilities ran at high rates.
'We expect China's oil demand to go through a soft patch
during this turnaround, before picking up again in the latter
part of Q2,' Sijin Cheng, an analyst at Barclays Capital, said
in a report after the trade data was released.
The data mitigates some of the weak sentiment that has been
plaguing markets since the U.S. Labor Department said on Friday
that employers added 88,000 jobs outside farming, less than half
the analyst forecast of a 200,000 increase.
'Oil futures are under some downward pressure and some of
the recent economic data, such as U.S. jobs, is indicating that
the U.S. economic recovery is still slow,' said Victor Shum, a
senior partner at Purvin & Gertz in Singapore.
'Traders will continue to look for signals out of China to
see if the growth momentum is intact.'
One such signal came from China's inflation numbers on
Tuesday, which showed a slower rate of price increase, allaying
concerns of policy tightening that could derail growth in the
Diplomatic worries over North Korea and Iran helped keep
Tension in the Korean peninsula escalated after North Korea
moved one long-range missile in readiness for a possible launch
and South Korea said it had raised its surveillance.
Iran, which is engaged in a dispute with Western nations
over its nuclear program, said it had begun operations at two
uranium mines and a milling plant after weekend talks to resolve
the dispute ended in stalemate.
(Reporting by Ramya Venugopal; Editing by Clarence Fernandez
and Joseph Radford)
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