NEW YORK (Reuters) - Oil prices rose on Monday after China’s premier called for more efforts to stimulate growth and as investors cautiously awaited results of Iran’s second round of revived talks with major powers over Tehran’s nuclear program.
Chinese Premier Wen Jiabao’s call for “giving more priority to maintaining growth” signaled Beijing’s willingness to take action after several recent economic indicators suggested that the economy could continue to slow.
“China’s central bank has already cut bank reserve requirements to stimulate growth and such comments suggest that even more may be done in the months ahead to ward off a hard landing,” Addison Armstrong, a senior director at Tradition Energy, said in a note.
Hopes for Chinese stimulus and the Group of Eight industrialized nations’ emphasis on the need for growth and jobs at their Saturday summit provided a lift to oil, U.S. and European equities and key industrial feedstock copper. .N .EU <MET/L>
The G8 backed keeping Greece in the euro zone, but gave no specific prescription for resolving the widening debt crisis.
G8 leaders did raise pressure on Iran by signaling a readiness to tap strategic oil stockpiles quickly if sanctions on Tehran strain supplies.
Brent July crude rose $1.67 to settle at $108.81 a barrel, reaching $109.26 intraday. The gain snapped a string of three lower settlements and followed Brent’s 10.59 percent slide in the preceding three weeks.
After six straight lower settlements, U.S. June crude rose $1.09 to settle at $92.57. The June contract expires on Tuesday, with U.S. crude also trying to break a string of three weekly losses.
U.S. RBOB gasoline and heating oil also closed higher, with gasoline receiving a lift ahead of the Memorial Day holiday weekend, the traditional start of the summer driving season.
Total crude trading volumes were lackluster, around 33 percent below 30-day averages for both Brent and U.S. crude in post-settlement trading. Analysts and brokers cited the approach to the U.S. June contract expiration and caution ahead of Iran’s nuclear talks this week as helping keep volume curbed.
Brent’s premium to U.S. crude increased to $15.95 a barrel based on July contract settlements, after Saturday’s start of the Seaway crude pipeline reversal.
The Seaway pipeline began pumping crude from Cushing, Oklahoma, to the U.S. Gulf Coast. The reversal is intended to ease a glut of crude in the U.S. Midwest and is expected to reduce Brent’s premium to U.S. crude.
U.S. crude oil stocks were expected to have increased last week, a ninth straight rise, according to a Reuters survey of analysts on Monday. Fuel stocks were seen unchanged.
The euro turned positive against the U.S. dollar, lifted by gains in European and U.S. equities. The dollar index .DXY weakened. A weaker U.S. currency can be supportive to dollar-denominated commodities by making them less expensive for customers using other currencies. <USD/>
The U.N.’s International Atomic Energy Agency (IAEA) chief Yukiya Amano held talks in Iran on Monday and expects them to have a positive impact on Wednesday’s six-power meeting, Iranian media said.
But there was no sign of a breakthrough deal and there was no immediate comment from the IAEA.
Amano met the head of Iran’s nuclear energy agency, Fereydoun Abbasi-Davani, and its top nuclear negotiator, Saeed Jalili, who will meet in Baghdad on Wednesday with the five permanent members of the U.N. Security Council and Germany.
Traders and analysts remain skeptical that negotiations will succeed as a European Union ban on Iranian oil set for July approaches, but concerns about a conflict in the region and disrupted oil supply were eased by April’s restart of talks.
Increased production from Saudi Arabia, Iraq and Libya have helped push U.S. crude oil inventories to a 21-year peak and allowed Iran’s customers to seek alternative barrels in the face of tightening sanctions on Tehran.
China’s crude oil imports from Iran rebounded more than 50 percent in April from March after resolving pricing disputes over term contracts, but shipments fell nearly a quarter from a year ago.
Additional reporting by Gene Ramos in New York, Jessica Donati in London and Florence Tan in Singapore; Editing by Bob Burgdorfer and Jim Marshall