Brent oil climbs slightly as commodities rally

Brent oil today rebounded from the lowest close in 12 years in London, boosting energy shares across Asia, as commodities prices from metals to grains shrugged off weaker-than-expected Chinese economic data.

Futures rose as much as 3.5 per cent while PetroChina Co, the country's biggest producer, led gains in energy companies. China's gross domestic product last quarter grew at the weakest since 2009, while industrial production, retail sales and fixed-asset investment all slowed, data showed today.

Oil markets could ''drown in oversupply,'' sending prices even lower as demand growth slows and Iran boosts exports, according to the International Energy Agency.

''The market has decided to put as positive spin on the China GDP data because we were so bearish going into it,'' Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc, told Bloomberg. ''This is a relief rally. The China data is not good, but it's not as bad as originally feared.''

Oil is down about 21 per cent this year amid volatility in Chinese markets and speculation a surge in exports by Iran after the removal of restrictions capping its crude sales will prolong a global glut. The Persian Gulf nation's first-quarter production increase is probably already priced into the market, according to a report from Goldman Sachs Group Inc.

Brent for March settlement climbed as much as 99 cents to $29.54 a barrel on the London-based ICE Futures Europe exchange, and was at $29.29 at 9:28 a.m. London time. The contract fell 39 cents to $28.55 on Monday, the lowest close since December 2003. The European benchmark crude traded at a discount of $1.39 to West Texas Intermediate for March.

WTI for February delivery, which expires Wednesday, was 19 cents higher at $29.61 a barrel on the New York Mercantile Exchange. Monday's transactions will be booked with Tuesday's because of the Martin Luther King Jr holiday. The contract closed at $29.42 a barrel on Jan. 15, the lowest settlement since November 2003. The more-active March future rose 29 cents to $30.68.

The IEA trimmed 2016 estimates for global oil demand as China's economic expansion weakens, and raised forecasts for supplies outside the Organization of Petroleum Exporting Countries. While non-OPEC supply is set to drop 600,000 barrels a day in 2016, Iran's comeback could fill that gap by the middle of the year. As a result, world markets may be left with a surplus of 1.5 million barrels a day in the first half.

Iran Output
Iran's oil ministry gave directions to increase output by 500,000 barrels a day after international sanctions were lifted, the country's news agency Shana said. Neighbouring countries will pump more within six to 12 months and take away Iranian market share if the country doesn't boost production, said Roknoddin Javadi, managing director of state-run National Iranian Oil Co, according to Shana.

OPEC has forecast a steeper drop in supplies from rival producers this year as prices slump. Output outside the group will fall by 660,000 barrels a day, the group said Monday in its monthly market report, deepening the decline from its previous estimate by 270,000 barrels a day.

China boosted its oil refining to a record last year as it became a net fuel exporter for the first time. The world's second-largest consumer raised processing by 3.8 percent to 522 million metric tons in 2015, or about 10.48 million barrels a day, according to to data released by the National Bureau of Statistics on Tuesday.

Copper in London advanced a second day while corn in Chicago it climbed to near a four-week high.