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Oil prices rise despite China demand dip

Monday, September 10 11:37:51

Brent crude oil climbed towards $115 per barrel today, buoyed by expectations of economic stimulus measures from the United States, despite worse-than-expected Chinese trade data.

Chinese imports fell 2.6 percent year on year in August, confounding expectations of a 3.5 percent rise. Exports grew 2.7 percent, below forecasts of a 3 percent rise.

But markets are hoping that growing signs of economic slowdown in China and in the United States will encourage the U.S. Federal Reserve to pump more money into the economy, a move that could help depress the dollar and boost commodities and oil.

Brent crude futures for October delivery were trading 70 cents higher at $114.95 per barrel by 0855 GMT, after settling up 76 cents on Friday. U.S. crude was trading up 12 cents at $96.54 per barrel. "The market is clearly betting on a third round of quantitative easing from the United States," said Tamas Varga, analyst at brokers PvM Oil Associates in London. "The Chinese data were pretty bearish as were U.S. jobs figures last week. But it is a twisted logic: bad news can be good news if it leads to a positive policy response. That is what is pushing up prices now," Varga said.

Monday's Chinese data underscored the severity of a slowdown in the world's second-biggest oil consumer and Chinese oil trade figures showed a sharp decline in fuel imports as export growth slowed. China's crude oil imports fell 12.5 percent in August from a year earlier to the lowest daily rate since October 2010, while implied oil demand in China fell to 8.92 million barrels per day (bpd), underlining flagging domestic demand while the global economic outlook darkens. (C ) Reuters