Oil rises after Iran, world powers fail to reach an agreement, China data

West Texas Intermediate rebounded on Monday and Brent rose for a second day after Iranian diplomats and their counterparts from the U.S., U.K., France, Germany, Russia and China fell short of an agreement to scale back the Islamic republics nuclear program and end a decade-long standoff. Upbeat data from worlds second-biggest consumer China boosted demand prospects and pushed prices up.

On the New York Mercantile, WTI crude for delivery in December traded at $95.14 per barrel at 16:01 GMT, up 0.57% on the day. Prices held in range between days high and low of $95.32 and $94.12 per barrel respectively. The U.S. benchmark marked a minor decline on Friday, an eight daily retreat in nine, and settled the week 0.2% lower, a fifth consecutive weekly loss.

Meanwhile on the ICE, Brent futures for settlement in December rose by 0.86% to $105.93 a barrel by 16:01 GMT. Prices surged to a session high of $106.20 while days low stood at $105.11 a barrel. The European benchmark snapped three days of declines on Friday and rose by 1.5%, trimming its weekly retreat to 0.8%.

Both benchmarks advanced on Monday after Iranian diplomats and their peers from six world powers failed to reach a deal in Geneva on curbing Irans nuclear program. The Islamic republics nuclear intentions forced the U.S. and the European Union to further tighten sanctions in July 2012, additionally crippling the nations crude exports and battering its economy.

Market players expected a possible thaw in the U.S.-Iran relations to erode oils geopolitical risk and bring back nearly 1.5 million barrels per day of oil to the market, pushing prices down. According to the median estimate of 19 traders and analysts surveyed by Bloomberg on October 14, Brent will drop below $100 per barrel if sanctions on Iran were to be eased.

Michael Lynch, the president of Strategic Energy & Economic Research in Winchester, Massachusetts, said for Bloomberg: “The loosening of the sanctions is the first step toward significant easing in geopolitical tension and political risk in the oil market.”

Iran pumped an average of 3.91 million barrels of oil per day in 2005, compared to 2.6 million bpd last month, according to a Bloomberg survey. The country ranked sixth among OPEC members last month after output fell by 565 000 barrels per day from June 2012, when it was the second biggest producer in the group. A report by the Carnegie Endowment for International Peace estimated in April that Iran lost $100 billion in foreign investment and oil revenue due to Western sanctions. According to IMF estimates, the Persian Gulf nation’s economy will contract by 1.5% in 2013 after its GDP growth decelerated by 1.9% last year.

China data

The market also received a boost after upbeat data from China on Friday and Saturday spurred hopes the Asian nation will meet its government growth target, boosting demand prospects in the worlds second biggest consumer.

China’s National Bureau of Statistics reported on Saturday consumer prices rose by the most in eight month in October, led by gains in food prices. According to the government agency, consumer inflation jumped by an annualized 3.2% last month, slightly up from September’s 3.1% advance. Despite trailing the median estimate of analysts surveyed by both Reuters and Bloomberg for a 3.3% surge, last month’s reading matched February’s 10-month high.

However, the statistics agency also said that producer prices decelerated for a 20th consecutive month in October, the longest stretch since 2002. Year-on-year, China’s Producer Price Index fell by 1.5%, underperforming expectations for a drop by 1.4% from September’s 1.3% decline. On a monthly basis, producer inflation remained unchanged. This curbed speculations Chinas central bank might tighten its monetary policy.

Data also showed the Asian nation’s industrial production surprisingly expanded by 10.3% last month, defying analysts’ projections that factory output growth will decelerate to 10.0% after it jumped 10.2% a month earlier.

Meanwhile, retail sales rose by 13.3% in October, the same as in September, but trailed expectations for a 13.4% advance. Fixed-asset investment, a key driver for economic growth, matched expectations for a jump by 20.1% in the ten months through October, but were slightly lower than last year’s 20.2% increase during the comparable period.

Also fanning positive sentiment, China’s General Administration of Customs said on Friday the Asian nation’s exports rebounded above expectations in October after declining in September. Stronger global demand sent overseas shipments soaring by 5.6% last month, exceeding analysts’ projections for a surge of 3.2% from the previous month’s 0.3% decline.

Meanwhile, China’s inbound shipments rose at a slower-than-expected pace but still marked a healthy expansion. The Asian country’s imports rose by 7.6% in October, underperforming expectations for an advance of 8.5% but still marked an improvement from September’s 7.4% gain. The upbeat exports reading widened the nation’s trade balance surplus to $31.10 billion, compared to projections for a rebound to $23.90 billion from the preceding period’s plunge to $15.20 billion.