Oil Rises on China Demand

Oil Rises on China DemandOil Rises on China Demand

Oil prices rose on Tuesday as data showed Chinese oil demand probably hit a record high in 2015, but contracts remained near 12-year lows as the IEA said the market should stay oversupplied this year.

Brent crude futures, the global benchmark, were up 45 cents at $29.00 a barrel. US crude futures were down 39 cents at $29.03 a barrel after touching an intra-day high of $30.21. The US contract did not settle on Monday, a public holiday in the US market, Reuters reported.

"It seems to be a healthy upside correction in an otherwise downtrending market," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Traders said prices drew support from strong oil demand in China. Preliminary Reuters calculations based on government figures showed record oil consumption of 10.32 million barrels per day in 2015, up 2.5% from 2014, defying slowing growth in the world's second-largest economy. The oversupply is set to intensify with the return of Iranian barrels to the market following the lifting of sanctions.

Most analysts expect Iran's full return to oil markets to be relatively slow due to the need to overhaul its infrastructure. The country is also estimated to have stored 12-14 million barrels of crude and 24 million barrels of condensates for immediate sale.