Growth story pushes oil prices higher for the week

The Oil markets had a substantial rally this week as market participants began to refocus on the global growth story. The combination of solid economic data points out of the US, UK, Canada and Australia, pushed WTI crude oil to the high end of the current $70-$84 dollar range. Most of the rally occurred on Friday after the markets absorbed a better than expected US employment report. WTI finished the week up $1.80 a barrel to $81.30. With economist expecting a snap back employment picture next month, after potential losses in the labor markets due to the inclement weather on the east coast, oil could be headed to higher levels.

The oil market started the week off on a positive note after Royal Dutch Shell Plc’s Kokori oil flow station in Nigeria was attacked yesterday as militants renewed operations against the energy industry in the southern Delta region. The People’s Patriotic Revolutionary Force claimed responsibility for the assault in an e-mailed statement, saying it had begun “fresh and final hostilities in the Niger Delta and beyond.” The group called on international oil companies to leave the region immediately. Attacks by armed groups in the Niger Delta, home to Nigeria’s energy industry, cut more than 28 percent of the country’s oil production between 2006 and 2009 and deterred investment. Output started to recover after a government amnesty program last year prompted thousands of fighters to disarm.

The inventory data that was release on Wednesday by the Department of Energy was not constructive to the oil markets. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.1 million barrels from the previous week. At 341.6 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Although supplies registered inflated levels, total products supplied over the last four-week period has averaged 19.3 million barrels per day, up by 3.0 percent compared to the similar period last year.

Implied demand for oil in China, the world’s second-largest energy consumer, may rise 5 percent this year to 427 million metric tons, after imports reached a record last year, according to a newsletter published by the official Xinhua News agency. An increase in apparent consumption will deepen China’s dependence on foreign crude oil, boosting net imports to more than 210 million tons this year, according to the China Oil, Gas & Petrochemicals monthly newsletter.