Oil Settles Near $79 as China Demand Seen Strong

Oil prices steadied Wednesday as the dollar rebounded from 15-month lows, countering data showing strong demand growth from No. 2 consumer China.

U.S. light, sweet crude rose 23 cents to settle at $79.28 a barrel, after rising to $80 earlier in the day. London Brent crude rose 45 cents to settle at $77.95 a barrel.

The dollar rallied back from 15-month lows against major currencies in a technical rebound after selling pressure failed to push the U.S. currency through key levels.

"The rebound by the dollar definitely helped pull crude back," said Tom Bentz, analyst at BNP Paribas Commodity Futures Inc in New York.

Investors have poured money into oil and other commodities this year when wider economic data suggests a rebound that could spur fuel demand.

Oil prices have felt pressure as well when investors retreat into safer havens, such as the dollar.

Further weakness came as oil and natural gas companies restored operations shut down due to Tropical Storm Ida earlier in the week in the Gulf of Mexico.

The U.S. Minerals Management Service reported 31 percent of Gulf of Mexico oil production and nearly 8 percent of natural gas output remained shut on Wednesday.

The rebound in the dollar helped counter data from China, which showed crude imports hit the second-highest level in October, showing that oil demand continues a gradual revival from a sharp slowdown in late 2008 and early this year.

Producer group OPEC raised its forecast for world oil demand growth slightly, but added that fuel consumption may not return to levels seen before the global economic slowdown.

Data from industry group American Petroleum Institute released late Tuesday showed a larger-than-expected increase in U.S. crude oil stockpiles in the week to Nov. 6, as well as gains in gasoline and distillate inventories.

Traders were also awaiting U.S. inventory data from the U.S. Energy Information Administration, delayed by one day until Thursday due to the U.S. Veteran's Day holiday.

In Europe, crude oil inventories rose in October as refiners reduced operation rates to match falling demand.

Oil product volumes stored in floating storage has risen to 90.3 million barrels and now exceeds total daily oil consumption on a global scale, according to ship brokers ICAP.

The move was an upward revision of nearly 15 million barrels from the previous estimate of 76 million barrels at the end of October.

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