Brent crude oil climbed slowly on Wednesday morning after positive U.S. retail sales data was reported. The commodity rose only modestly and traded at $110.50 on Wednesday morning as European car sales data capped gains.
U.S. retail sales rose by 0.5 percent in December, beating forecasts for just a 0.2 percent rise. The increase showed that consumer spending was strong despite the threat of tax increases and government spending cuts. The data renewed investor confidence that the number one oil consuming nation's demand wouldn't waver.
Also supporting Brent prices was a wave of cold weather in both Europe and the United States. The weather caused increased energy usage, but gains were limited as European car sales data pushed prices down.
The data showed that new car sales were at their lowest level since 1995, a concern for the region whose GDP depends largely on big ticket items like cars and homes. Poor demand for new cars, coupled with data released Tuesday showing that Germany's economy shrank in the fourth quarter of 2012, added to worries that the eurozone was not recovering as many have predicted.
Germany, which has weathered the eurozone financial crisis relatively well, seems to finally be feeling the effects financial trouble in neighboring countries. The power house economy contracted in the fourth quarter at its fastest pace in nearly three years.
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Concerns about global demand have long plagued Brent prices, and with the eurozone in crisis and the U.S. teetering on the edge of a political gridlock over the upcoming debt ceiling, many are worried that the world's oil supply will outpace demand. The World Bank lent support to demand woes on Tuesday, cutting its forecast for global gross domestic product growth to 2.4 percent.
Looking forward, investors will be watching for China's GDP data which is set to be released on Friday. According to CNBC, many are expecting the country's economic growth to increase to 7.8 percent.
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