The United State’s crude demand from its major producers, one of which is Nigeria, rose on Tuesday leading to a rise in the prices of the commodity from 21-month low of $53 a barrel.
At the close of global market on Tuesday, the commodity sold for over $55 a barrel amid optimism that fuel demand might continue to improve in the world’s largest consumer.
Crude oil for December delivery rose as much as 91 cents, or 1.7 percent, to $55.86 a barrel on the New York Mercantile Exchange.
It was at $55.60 a barrel at 4 p.m. Singapore time. Prices have tumbled 63 per cent since reaching a record $147.27 on July 11, 2008.
Oil closed at its lowest since January 29, 2007, after the economy in Japan, the world’s third-biggest oil- consuming country, contracted 0.4 per cent in the third quarter.
China National Petroleum Corporation said on Tuesday demand has fallen since September because of credit-market turmoil.
U.S. oil demand from Nigeria and other crude supplying nations has, according to October document of global energy watchdog, Energy Information Administration (EIA) backpedaled.
Although the agency has not come up with oil demand report for November, analysts said Tuesday increase in demand would impact an increase in the level of demand for the month.
Nigeria, whose crude supply history with the U.S. spanned 35 years, is a major crude supplier to the U.S. after Saudi Arabia and Venezuela, with about 1.084 million barrels a day supply level as shown by the EIA’s 2007 crude demand document.
The U.S. July demand, according to a revised data released by the agency for October, averaged 19.412 million barrels a day, the lowest for any month since May 2003 and 1.335 million barrels a day, the level it reached years ago.
"The 6.4% year-on-year decline is a sharp revision from earlier estimates, which showed demand dropping just 2.9%, or 599,000 barrels a day to 20.148 million barrels a day," the EIA had stated.
The data released by the U.S. department of energy read; "The 1.335 million barrels a day year-on-year decline in July is the largest since February, and follows 1.17 million barrels a day, or 5.6 per cent decline in June.
"In the first seven months of 2008, demand in the world’s largest oil consumer averaged 19.727 million barrels a day, down 4.8 per cent, or 992,571 barrels a day from a year ago. The outright level of January-July demand is the lowest since 2002, while the fall off in demand is the biggest in the period since 1980."
U.S. output at factories, mines and utilities rose 1.3 percent in October, more than forecast, as refineries and oilrigs returned to service after Hurricanes Gustav and Ike, the Federal Reserve said on Tuesday.
Industrial plants used 76.4 percent of capacity, an increase from 75.5 percent in September.
"We’re not getting much joy out of the U.S., although it was not below what the market was expecting so prices might be getting some supports from that,” Mark Pervan, a senior commodity strategist said. "The industrial production numbers were better than expected but still low.”
Crude oil stockpiles probably climbed 1 million barrels in the week ended November14 from 311.9 million the week before, according to the median of nine analyst estimates before an Energy Department report this week.