Oil gains on China economic data

Oil advanced on Monday, extending last weeks gains as mixed but matching expectations economic data from China boosted the countrys demand outlook. GDP growth matched expectations, while industrial production failed. However, oil consumption in the worlds second biggest consumer gained by more than 10%.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $105.85 per barrel at 6:39 GMT, up 0.28% on the day. Prices held in range between days low at $105.13 and high of $105.92, which was hit during the early European session. Light, sweet crude settled more than 1.5% higher on Friday and closed the week 2.59% higher after surging more than 10% during the preceding two.

Meanwhile on the ICE, Brent oil for September delivery stood at $108.23 per barrel at 6:42 GMT, up 0.27% on the day. Prices ranged between daily high and low at $108.26 and $107.74 respectively. The European benchmark settled 1.7% higher on Friday, marking a 1.26% weekly gain after surging 6.6% during the preceding two.

Oil swung between gains and losses on Monday after capping a third weekly advance. Chinas economy grew by 7.5% in the second quarter, below last years 7.7% but met expectations. Although this was a ninth decline for the past ten quarters, this was a relief for investors, some of which expected even lower readings. On a quarterly basis, Chinese GDP rose by 1.7%, above Q1s 1.6%, but failed to meet projections at 1.8%.

According to Chinas National Bureau of Statistics, the Asian countrys industrial production in June failed to meet expectations for a 9.1% surge and stood at 8.9%, also below Mays 9.2% reading. However, oil consumption in the worlds second biggest consumer rose by 11% from a year ago to nearly 10 million barrels per day.

Ric Spooner, chief market analyst at CMC Markets, said for Reuters: “The China data is very mixed and that’s probably why the response is so muted. There is underlying fundamental strength in the energy complex. We’re still looking for a test of that $106 to $108 zone for West Texas.”

The U.S. Commodity Futures Trading Commission said in its Commitments of Traders report on July 12 funds increased their net-long positions on WTI by 6.9% to more than 330 000 futures and options combined in the week ending July 9, nearing the record during the Libyan civil war in 2011.

Meanwhile, investors are still eyeing the political situation in Egypt. The Egyptian interim prime minister filled senior posts on Sunday, forming a cabinet that aims at restoring civilian rule in a speedy timetable. Market players are also looking ahead into this weeks key U.S. economic data, which will provide information about the economys recovery pace. Retail sales, Core Retail Sales, New York Empire Manufacturing Index and Business Inventories are due on Monday. Consumer inflation (Consumer Price Index) and Industrial production are scheduled for release on Tuesday, while on Wednesday Building Permits and Housing starts will provide data about the U.S. construction sector. Initial Jobless Claims is also due on Thursday and Ben Bernanke will make two separate statements on Wednesday and Thursday, bringing further insight into the future of the central banks monetary stimulus.