U.S. crude-oil futures danced around the break-even point Friday as traders weighed optimistic Chinese economic data and a bullish monthly oil report against persistent weak U.S. oil demand.
West Texas Intermediate light, sweet crude oil, or WTI, for February delivery settled 7 cents, or 0.1%, higher at $95.56 a barrel on the New York Mercantile Exchange. That set a new 17-week high by a slight margin. Brent crude oil on the ICE futures exchange for February delivery settled 79 cents, or 0.8%, higher at $111.89 a barrel. WTI futures have climbed 12% since Nov. 7 on an improving economic outlook for China and the U.S.
"Crude has had a good run up to its highest price level since September, so it's taking a breather here," said Tim Evans, an analyst at Citi Futures Perspective.
Supporting oil prices Friday were expectations that an expanding Chinese economy would translate into more crude demand. The world's No. 2 crude-oil consumer reported a fourth-quarter growth rate of 7.9%, up from 7.4% in the previous quarter. The data topped economists' expectations for 7.8% growth.
Futures also were bolstered by the International Energy Agency raising its global oil-demand forecast for 2013, citing stronger demand from China. The IEA said it expects global demand to increase by 900,000 barrels per day, to 90.8 million barrels per day this year.
However, while China's oil demand is expected to rise, demand remains weak in the U.S., the world's biggest consumer of crude. U.S. demand for refined petroleum products, like gasoline, fell 2% to a 16-year low in 2012 while domestic crude oil production jumped to a 15-year high, the American Petroleum Institute said Friday.
"U.S. oil demand is horrific and remains horrific," said Kyle Cooper, managing partner at IAF Advisors, adding that this will put downward pressure on oil prices.
Oil's gains were also capped by a stronger dollar and lackluster equities. A higher-valued U.S. currency makes dollar-denominated crude oil less attractive to buyers in other currencies. Crude-oil futures also tend to track equities, as both are heavily influenced by prospects for economic growth.
Front-month February reformulated gasoline blendstock, or RBOB, settled 2.84 cents higher at $2.7668 a gallon. February heating oil settled 3.13 cents higher at $3.0525 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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