London: Brent crude rose above $111 a barrel on Thursday on a decline in oil stockpiles in top consumer the United States and supply cuts in Libya and South Sudan, but slowing economic expansion in China capped gains.

Growth in factory activity in China, the world’s second largest oil user, slowed in late 2013, according to purchasing managers’ indexes published by the government and HSBC, weighed down by shrinking export orders.

“The Chinese PMI data were not exactly bullish," IHS oil consultant Victor Shum said. “The only thing supporting oil prices is probably the US inventories."

Brent crude rose 37 cents from Tuesday to $111.17 a barrel by 1014 GMT. US crude was at $98.73, up 31 cents. Markets were shut on Wednesday for the New Year.

Data from the American Petroleum Institute on Tuesday showed a drop of 5.7 million barrels in US crude stockpiles, nearly double the 3-million-barrel draw expected by analysts surveyed by Reuters.

The US Energy Information Administration (EIA) will release its data on 3 January due to the holiday.

Lower US inventories helped buoy the West Texas Intermediate (WTI) oil price in 2013. The average for the past year was $98.05 a barrel, up 4.2% from $94.14 in 2012.

The average Brent price for 2013 was $108.70 in 2013, down 2.7% from $111.68 in 2012 in a well-supplied market despite disruptions in the Middle East, Africa and North Sea.

Production in Libya, Iran, Iraq and the United States will be closely watched this year, in addition to any signs of further stimulus tapering by the US Federal Reserve.

In Libya, oil output is still less than 250,000 barrels per day (bpd), down from 1.4 million bpd in July, as ports in the eastern part of the country remain shut.

South Sudanese President Salva Kiir declared a state of emergency in two states on Wednesday as his negotiators prepared for peace talks with rebels to end more than two weeks of violence that has pushed the country towards civil war.

Iran and six world powers will implement an agreement in late January obliging Tehran to suspend its most sensitive nuclear work, an Iranian official was quoted as saying on Tuesday.

That raises the prospect of an increase in Iranian crude exports over 2014, according to some analysts.

“It may be six months or more before all of the Iranian oil returns to the market — and it will depend on Iran’s political compliance," Jason Schenker, president of consultancy Prestige Economics said in a note.

“When that happens, however, Brent crude oil prices could fall swiftly." REUTERS