By Jane Xie
SINGAPORE (Reuters) – Brent edged up on Tuesday, holding above $85 a barrel as robust China oil demand supported prices, although gains were capped by oversupply and lingering fears of a weak global economy.
Implied oil demand at the world’s largest energy consumer jumped 6.2 percent in September from August to 10.3 mln barrels per day, the highest since February, as crude throughput and imports reached their second-highest level this year amid a continued stockbuild.
Front-month Brent inched up 1 cent to $85.41 at 0544 GMT, remaining entrenched at below $100 since early September.
U.S. crude for November delivery gained 30 cents to $83.01, after ending nearly flat at $82.71 on Monday.
“With higher industrial production, we may see an increase in crude demand coming from China moving forward,” analysts at Phillips Futures in Singapore said in a note.
“This likely gives some upward push to crude prices but global crude demand should still remain weak and is likely to persist in the coming quarter.”
Despite the robust oil demand picture, China’s economic growth slowed in the third quarter to its weakest since the 2008/09 global financial crisis, raising expectations that Beijing will need to unveil more stimulus measures to avert a sharper slowdown.
Weak China economic growth added to worries about the global economic outlook which have led the International Energy Agency to slash its world oil demand growth forecast for next year.
“Any price movements should be limited,” said Tetsu Emori, a commodity fund manager at Astmax Investments in Tokyo.
“We should probably look at the bigger picture of how OPEC would react in their next meeting.”
Some members of the Organization of the Petroleum Exporting Countries have indicated that the group was unlikely to ease the oil supply glut by cutting output ahead of its Nov. 27 meeting. Others are preparing 2015 budgets with lower oil prices.
While Libya supports an output cut, other African members seemed less keen.
The oil price slump could also affect U.S. shale production. About a third of the production would be uneconomical at oil prices below $80 per barrel, analysts at Bernstein Research said.
