* China inflation jumps to 32-month high
* Allies vow to keep up military campaign in Libya
* Coming Up: U.S. industrial output for March at 1415 GMT
(Updates prices, detail)
By Christopher Johnson
LONDON, April 15 (Reuters) - Oil prices steadied with North
Sea Brent crude around $122 a barrel on Friday after data showed
China's economic growth beating forecasts, despite government
efforts to cool expansion and curb inflation.
Strong growth in the world's second-largest oil consumer is
bullish for fuel, but is encouraging Beijing to tighten monetary
policy in moves that could slow consumption.
Prices were supported by worries over supply from the Middle
East and Africa, as fighting in Libya continued, but were
tempered by a note from Goldman Sachs recommending underweight
allocation to commodities on a three to six-month horizon.
ICE Brent crude <LCOc1> for June was down 1 cent at $121.99
a barrel by 1235 GMT after gaining as much as 80 cents earlier.
U.S. crude futures <CLc1> for May fell to $107.66 a barrel, down
45 cents.
"The pace of Chinese growth points to further monetary
tightening there, which could weigh on Chinese fuel demand in
the future," said Carsten Fritsch, analyst at Commerzbank.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
More on Middle East unrest: [] []
Libya Graphics http://link.reuters.com/neg68r
Interactive graphic http://link.reuters.com/puk87r
Graphic on previous recessions and the oil price:
http://r.reuters.com/vyx88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
CHINA
Chinese economic annual growth eased slightly in the first
quarter to 9.7 percent from 9.8 percent in the previous quarter,
the National Bureau of Statistics said. []
Preliminary government data also showed China's implied oil
demand grew by double digits for the sixth consecutive month in
March but was down from February as refineries scaled back runs
on maintenance and soaring crude costs. []
Analysts expect China to raise reserves at banks and hike
interest rates again to put a lid on consumer prices after
growth eased just a touch in the first quarter, while its
inflation jumped to a 32-month high. []
Prices came under some pressure after the release of a
research note by Goldman Sachs recommending investors go
underweight commodities over a three to six month horizon.
The note echoed a Goldman call on Monday and also helped
knock down oil and copper prices, although the U.S. bank said it
was bullish over a one-year period. []
"Barring further persistent increases in oil prices that
damage demand, we expect demand growth to continue to outpace
supply growth, leading to much lower inventories and OPEC spare
capacity later next year, which would be hastened should the
Libyan outage persist," Goldman said in Friday's report.
Fritsch said the Goldman Sachs note appeared largely to be a
reiteration of its previously stated view but said traders may
have used it as an excuse to take profits.
"We still think that oil prices are strong mainly because of
supply side worries and the weaker dollar, not because of an
increase in demand," Fritsch said.
"It all depends when the risk premium starts to decline. We
believe the risk premium for oil is worth about $20 per barrel."
Expectations of a global economic recovery, a weak dollar
and fears of supply disruption in the Middle East and Africa
have all supported oil prices this month.
Surging inflation pressures and the natural disasters that
ravaged Japan last month look unlikely to stall an ascendant
global economy, a Reuters poll of around 350 economists showed.
[]
The dollar index <.DXY>, which tracks the dollar's
performance against a basket of major currencies, rose slightly
in Asia on Friday after falling to a 16-month low. []
Britain, France and the United States vowed on Friday to
keep up their military campaign in Libya until Muammar Gaddafi
gives up power, while the defiant leader pounded the city of
Misrata with missiles. []
(Additional reporting Florence Tan in Singapore; editing by
Keiron Henderson)
