Oil hits eight-month high on disruptions, Chinese demand

[June 08, 2016]  By Karolin Schaps

LONDON (Reuters) - Oil prices jumped to their highest level in eight months on Wednesday, rising for a third consecutive session on supply disruptions in Nigeria and strong Chinese demand data.

There was also a larger-than-expected drop in U.S. crude inventories on Tuesday, indicating an easing of the global supply glut. A weak dollar, which hit a five-week trough against a basket of currencies on Wednesday, also boosted prices. [FRX/]

"The market sentiment is positive; the trend and the momentum points to further gains," said Carsten Fritsch, commodities analyst at Commerzbank.

Brent crude futures rose to the highest level since last October at $52.24 a barrel. They were up 67 cents at $52.11 a barrel at 1042 GMT.

U.S. crude futures were up 65 cents to $51.01 a barrel, after reaching $51.12, their highest since last July.

Supply disruptions caused by a string of attacks by the Niger Delta Avengers militant group in Nigeria have brought the oil exporter's production to its lowest level in 20 years.

The group said on Wednesday it had attacked another oil well owned by U.S. oil group Chevron, adding to assaults on oil infrastructure owned by Shell and ENI.

Nigerian Oil Minister Emmanuel Ibe Kachikwu said output had dropped to 1.5-1.6 million barrels per day (bpd), down from 2.2 million at the start of the year.

At the same time, May trade data on Wednesday showed the biggest jump in China's crude oil imports in more than six years, adding to hopes that the economy of the world's second-largest oil consumer may be stabilising.

A petro-industrial factory is reflected in a traffic mirror in Kawasaki near Tokyo December 18, 2014. REUTERS/Thomas Peter

"China's economic activity is not slowing down as much as expected, which is a support to the market," said Kaname Gokon at brokerage Okato Shoji.

U.S. government data due on Wednesday will indicate weekly oil stock levels. Industry data on Tuesday showed U.S. commercial crude inventories fell by 3.6 million barrels last week.

The U.S. Energy Information Administration (EIA) will issue official inventory numbers at 1430 GMT.

The dollar fell to its lowest level in five weeks against a basket of currencies, hurt by waning expectations that the Federal Reserve will raise interest rates anytime soon.

(Additional reporting by Osamu Tsukimori in Tokyo; editing by Louise Heavens and Jason Neely)

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