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Oil rises in New York as Brent jumps to nine-month high on China

Feb. 8 (Bloomberg) -- Oil climbed in New York while Brent crude surged to a nine-month high in London after stronger-than- expected trade data from China signaled increased fuel demand in the world’s second-biggest consuming country.

West Texas Intermediate oil in New York trailed Brent’s gain, boosting the European benchmark grade’s premium an eighth day. China’s exports rose 25 percent in January from a year earlier and crude imports increased to the highest level in eight months, customs figures showed. Oil markets will “remain tight” in the first quarter and may push prices above its forecasts, Goldman Sachs Group Inc. said.

“Speculation that physical markets in Asia are tight and will get tighter is having a much bigger impact on Brent than WTI,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The strong oil import data out of China was very supportive.”

Crude oil for March delivery rose 57 cents, or 0.6 percent, to $96.40 a barrel at 9:49 a.m. on the New York Mercantile Exchange. The contract gained as much as 0.8 percent to $96.57. The volume of all futures traded was 61 percent higher than the 100-day average. Prices are down 1.4 percent this week, after advancing 14 percent over the prior eight weeks.

Brent oil for March settlement gained $1.37, or 1.2 percent, to $118.61 a barrel on the London-based ICE Futures Europe exchange. The contract increased as much as 1.4 percent to $118.85, the highest level since May 2. Volumes were 30 percent more than the 100-day average.

Widening Spread

The European benchmark grade’s premium to WTI widened as much as $22.36, the most since Dec. 14. The Brent-WTI spread has widened since Enterprise Product Partners LP said Jan. 31 that capacity will be limited until late 2013 on its Seaway pipeline to the Gulf Coast from Cushing, Oklahoma, the delivery point for the New York contract.

“The WTI-Brent spread has widened every day since the Enterprise announcement,” Armstrong said. “The spread had been shrinking on speculation that Seaway would be operating at full capacity but now those bets have to be wound down.”

Brent’s advance to more than $117 a barrel has been driven by improving fundamentals rather than increasing risk premium, Stefan Wieler, an analyst with Goldman Sachs in New York, said in a report dated yesterday.

Prices may exceed the bank’s forecasts, which for Brent futures are at $110 a barrel for the next three to six months, and at $105 in 12 months. For WTI, Goldman projects a level of $102.50 in three months, $105 in six and $97 in 12 months.

Chinese Imports

China bought 24.87 million metric tons of crude more than it exported last month, according to data published today on the website of the Beijing-based General Administration of Customs. That’s equivalent to 5.88 million barrels a day, the most since May, data compiled by Bloomberg show.

Brent, the benchmark price for more than half the world’s oil, extended gains yesterday amid signs of increased tension in the Middle East and reduced supplies by Saudi Arabia.

Iran won’t be coerced into holding direct negotiations with the U.S. about its nuclear program while being threatened and simultaneously squeezed by Western sanctions, Supreme Leader Ayatollah Ali Khamenei said yesterday. The U.S., which imposed new financial restrictions on Iran on Feb. 6, is ready for direct talks as soon as Khamenei gives a commitment to negotiate, Vice President Joe Biden said at the Munich Security Conference Feb. 2.

Technical Indicators

WTI may fall next week as technical indicators signal that prices may have risen too quickly to be sustainable, a Bloomberg survey showed. Eighteen of 37 analysts and traders, or 49 percent, forecast crude will decline through Feb. 15. Twelve respondents, or 32 percent, predicted an increase and seven forecast little change.

The relative-strength index of front-month oil futures rose above 74 at settlement on Jan. 30, the highest level since Feb. 24, 2012. The RSI was at 59 today.

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