China Sees Oil at $80 a Barrel

BEIJING

In December, China’s apparent oil demand surged 15% compared with the same period a year earlier, helping underpin a 16% rise in oil-future prices from mid-December to early January. More recently, signs that China’s government is trying to head off inflation and asset bubbles by curbing bank lending have created uncertainty over China’s economic outlook, contributing to a fall in oil prices.

Some analysts say markets may be overreacting to the credit-tightening measures, since much of the oil demand is being driven by infrastructure building that has already received funding, and any impact on demand could take months to manifest as lower demand.

“With growth front-loaded in 2010, the progressive tightening won’t bear much impact on oil demand in the first half of the year,” said Harry Tchilinguirian, senior oil analyst at BNP Paribas.

WSJ