Oil prices were boosted by data showing that manufacturing growth in China, the world’s biggest crude importer, held at an 18-month peak in November on firm domestic and foreign demand, despite worries the economy is facing a modest slowdown.
“Risk assets came back on with the positive numbers out of China,” Reuters quoted OptionsXpress market analyst Ben Le Brun as saying in Sydney.
“This could reverberate for a couple of days to support oil prices.”
Brent crude for January delivery had risen 43 cents to $110.12 per barrel by Monday morning, after finishing down $1.17 in the previous session. US crude was up 50 cents at $93.22 per barrel, after settling up 42 cents on Friday.
China’s official Purchasing Managers’ Index (PMI) stood at 51.4 in November, unchanged from October and ahead of market forecasts for a reading of 51.1.
“I think there is not too much to worry about on the demand side. It’s the supply that is still very much uncertain,” Le Brun said.
Opec oil output fell in November, remaining below 30 million barrels per day for a second month, a Reuters survey found, due to strikes and protests in Libya and further reductions in Saudi Arabian output.
Protests at Libyan oil fields and terminals limited supplies from the Opec member. Output averaged 350,000 bpd in November and by the end of the month was around 250,000 bpd, the survey found – a fraction of the 1.4 million bpd it was pumping earlier this year.
Envoys from Iran and six world powers will meet this week to start working out steps to implement a deal under which Tehran is to curb its nuclear programme in return for some respite from sanctions, a top Iranian negotiator said.
Following an interim deal reached with Iran last month, the US State Department has extended six-month Iran sanctions waivers to China, India, South Korea and other countries in exchange for their reducing purchases of Iranian crude oil.
Libyan and Iranian delegates meet with other Opec members on Wednesday in Vienna to consider adjusting the group’s 30 million bpd production target. With oil well above $100 per barrel the oil cartel is likely to leave the target unchanged, according to delegates who attend meetings.
“Crude oil prices remain within a range that Opec members are content with,” Reuters quoted Jason Schenker, president of Texas-based Prestige Economics, as saying in a note to clients. “We expect that this production target will be reaffirmed at the Opec meeting.”
Brent oil prices are expected to come under pressure next year due to ample supplies of US shale oil and slow demand growth, a Reuters poll of analysts forecast.
The monthly survey of 27 analysts projected Brent would average $104.10 per barrel in 2014, down from this year’s closing average price of $108.50. Last month’s poll saw Brent averaging $105.40 in 2014.
US economic data including third quarter gross domestic product, non-farm payrolls and ISM manufacturing PMI will be a key focus later this week, with the US Federal Reserve poised to reduce its stimulus as soon as it deems the economy is strong enough. The central bank will next meet over 17 and 18 December.