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Oil stays above $80 on strong China, US economic data

Oil stays above $80 on strong China, US economic data
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First Published: Fri, Oct 01 2010. 10 32 AM IST
Updated: Fri, Oct 01 2010. 10 32 AM IST
Singapore: Oil rose above $80 on Friday, staying at a seven-week high, after stronger than expected economic data from China and the United States raised hopes of demand recovery at the world’s largest consumers.
China’s manufacturing sector gained momentum last month, the official purchasing managers index (PMI) number showed, providing further evidence that the economy is pulling smoothly out of a second-quarter swoon.
US crude for November rose 41 cents to $80.38 a barrel at 8:17am, after posting an 11.2% gain in September, the largest monthly jump since May 2009.
ICE Brent for November was 34 cents higher at $82.65 a barrel.
“The China PMI data shows that the manufacturing sector is accelerating and will result in stronger oil demand,” said Michelle Kwek, an analyst at Informa Global Markets in Singapore. “This has boosted sentiment and keep oil prices supported.”
China’s financial markets are closed for a week from 1 to 7 October for the National Day holiday.
In the US, Thursday’s data showed new jobless claims fell last week, regional manufacturing grew faster than expected while consumer spending was stronger than expected earlier in the year.
“All eyes will be the Institute for Supply Management (ISM) report on US manufacturing,” Peter Beutel, president of US trading advisory Cameron Hanover, said in a note.
“Any return to stronger numbers - or a better-than-expected set of figures - would bring in more buying, we would expect.” Economists in a Reuters survey expect a reading of 54.5 versus 56.3 in August.
The positive economic data has kept the US dollar steady on Friday after dropping to an eight-month low against a basket of currencies in the previous day.
“The dollar could well rally further, downplaying the extent of QE (quantitative easing) needed and push down US treasury yields,” said Informa’s Kwek.
A stronger dollar makes oil less affordable to holders of other currencies.
The market is also keeping a close watch on Ecuador, an Opec member country which typically exports around 300,000 barrels per day of crude, after Thursday’s military and police protests thrust the country into political unrest.
Ecuador’s state oil company Petroecuador said on Thursday its operations had not been affected by political unrest and that the army was reinforcing security at its oil fields.
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First Published: Fri, Oct 01 2010. 10 32 AM IST
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