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Oil inches higher on positive Japan Q4 GDP data after falling on EIA update, Chinese demand concerns

Oil prices inched higher today, recovering from Friday’s falls on US inventory data along with news of the latest move by China to tighten its monetary policy and curb economic growth.

The US Energy Information Administration (NYSEMKT:EIA) released its crude stockpiles report on Friday, revealing a greater than expected increase of 2.4 million barrels. Gasoline stocks rose by 2.4 million barrels, which also was more than expected.

Earlier in the week, Back on Tuesday, an inventories update from API (American Petroleum Institute) showed an unexpectedly high increase in crude inventories of 7.195 million barrels last week, while a Platts survey projected a 2 million barrel rise. Gasoline stocks were up 1.552 million barrels, distillate stocks declined by 1.53 million barrels, while refinery utilization rate fell, moving down from 78% to 77%, reflecting lower demand.

The world’s second largest energy consumer China has raised the reserve requirements for banks by half a percentage point in its most recent step to cool down the ongoing growth and prevent the economy from overheating and tightening lending restrictions for banks last month.

The prices were supposed by positive news from Japan, whose GDP grew at an annual rate of 4.6% in Q4.

April Brent Crude reaches US$72.85/barrel, while US light, sweet crude for April delivery traded at US$74.10/barrel on the New York Mercantile Exchange.

Trading activity was low today due to holidays in the US and Asia.

Blue chip oil and gas producers posted small gains today. Cairn Energy (LSE: CNE) was in the lead with a 1.6% advance, while BG Group (LSE: BG) and Tullow Oil (LSE: TLW) added less than 1%, as did Shell (LSE: RDSB), while fellow supermajor BP (LSE: BP) tacked on 1%.

Amec (LSE: AMEC) added 1.9%, while fellow engineering firm Petrofac (LSE: PFC) rose marginally.

Midcaps followed the trend with the exception of Salamander Energy (LSE: SMDR), which declined 1.3%, and Heritage Oil (LSE: HOIL), which was flat.

Dana Petroleum (LSE: DNX) and Melrose Resources (LSE: MRS) added 4% and 3.5% to take the lead. Premier Oil (LSE: PMO) and Soco international (LSE: SIA) followed with gains of 2.5% and 1.1% respectively. Other FTSE 250 constituents Dragon Oil (LSE: DGO) and JKX Oil and Gas (LSE: JKX) rose marginally.

Services companies were mixed as while Wood Group (LSE: WG) added 1.3%, Wellstream Holdings (LSE: WSM) was flat.

North America focused oil & gas junior Pantheon Resources (AIM: PANR) and North American based explorer Nighthawk Energy (AIM: HAWK) led the juniors, climbing 5.5% and 4.5%. Irish oil and gas exploration company Petroceltic International (AIM: PCI) and Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) also did well, adding 4.2% and 3.5% respectively.

Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Iraq operating Irish oil company Petrel Resources (AIM: PET) were in the red, slipping 6% and 5%.

Disclosure: The author holds no positions in the company