Oil prices rise on hopes for China stimulus

[SEOUL] Oil prices edged up on Tuesday on hopes economic stimulus could ramp up in China after disappointing data from the world's No.2 economy.

Front month US crude had climbed 31 cents to US$58.45 a barrel by 0145 GMT, after ending the previous session down 99 cents.

Brent for June delivery rose 24 cents to US$62.93 a barrel, having settled down 62 cents in the previous session.

China's consumer inflation weakened more than market expectations, to 1.2 per cent year-on-year in May, raising concerns about growing deflationary pressures as the economy cools.

Chinese oil imports fell about 11 per cent in May from a year ago in the steepest drop since November 2013.

Investors have also been concentrating on supply, with OPEC on Friday agreeing to stick by its policy of unconstrained output. "Focus has now turned to Iran and Iraq, where both countries are expecting to raise exports in the short term," Australia and New Zealand Banking Group Ltd (ANZ) said in a note on Tuesday. "Iran in particular has the potential to flood the market with the most crude oil if sanctions are lifted later this month. Compounding the situation was US supply remaining at record levels of 9.59 million barrels per day." Iraqi forces backed by US-led coalition air strikes have opened supply lines into Baiji town and its nearby oil refinery, making progress at last against Islamic State rebels in a seesaw battle that has gone on for months, the Pentagon said on Monday.

An official in Iran - Opec's fifth-largest crude producer - said on Monday that eight western European companies are keen to invest in Iran's US$2.8 billion Siraf oil refinery project, as the country ramps up capacity to reduce is dependence on imports.

Oil production declines from the largest US shale plays are forecast to deepen for the third consecutive month in July even as rig productivity remains high, data from the US Energy Information Administration showed on Monday.

Asia shares were subdued on Tuesday, while the dollar relapsed as investors raced to book profits on its post-payroll gains despite all the talk of a US rate rise as early as September.

REUTERS