Singapore: Brent crude futures climbed more than $1 to over $109 a barrel on Wednesday, snapping a six-day losing streak after economic data from China suggested a gradual recovery in the world’s No. 2 oil consumer.

China’s economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers signalled, with new orders and output at their highest in months.

The data helped allay concerns that the global economy may be slowing faster than previously expected, as a recent spate of poor US corporate earnings and outlooks had indicated.

Brent crude rose as far as $109.28 a barrel and was trading at $109.22 by 10:30 am. US oil gained 63 cents to $87.31, snapping a four-day decline.

“The PMI data is supportive for commodities and I expect the crude market to be buoyant," said Ker Chung Yang, senior investment analyst at Phillip Futures Pte Ltd.

“The upside for oil has been dampened by global economic concerns in Europe and China. But the upbeat PMI data from China is relieving concerns of slower growth."

Brent fell for a sixth straight session on Tuesday, when it hit an intraday low of $107.31, the weakest since 20 September and below its 100-day moving average at $107.42. The US contract slumped more than 3% in the previous session to touch a session-low of $85.69, the lowest since 13 July.

Oil prices have been under pressure in the past few days because of a weak demand outlook from the world’s top two oil consumers. Faced with weakening revenue, three of the largest US companies, including Dow Chemical Co, warned that they would cut jobs to protect profits.

“We think recent sell-offs appear a little over done, the National Australia Bank said in a note to clients. “Medium term, we expect recent prices to be consolidated giving us a year average price of $113 a barrel in 2013."

Prices were also capped by data showing US crude oil inventories rose slightly last week, according to the American Petroleum Institute. Crude inventories increased by 313,000 barrels in the week to 19 October, according to the API, compared with an analyst forecast for an increase of 1.9 million barrels in total.

Investors are awaiting inventory numbers from the Energy Information Administration (EIA) due later in the day to gauge the demand outlook for the United States.

Supporting Prices

Fears of possible supply disruption due to unrest in the Middle East have lent some support.

Iran’s oil minister Rostam Qasemi said on Tuesday it would stop oil exports if pressure from Western sanctions got any tighter and that it had a “Plan B" contingency strategy to survive without oil revenues.

“Growing oil stocks and weak demand sentiment appear to have offset Middle East tight supply worries, with a threat by Iran to curtail oil exports in response to tighter sanctions," analysts at ANZ said in a report.

Western nations led by the US have imposed tough sanctions on the Islamic Republic this year in an attempt to curb its nuclear programme that they say is designed to produce atomic weapons. Tehran says its nuclear plans are peaceful.

Qasemi’s statement is the latest in a series of threats of retaliation by Tehran in response to the sanctions, which have heightened political tensions across the Middle East and, analysts say, led to a sharp drop in Iranian oil exports.

“Supporting our view, we anticipate that geopolitical risk is likely to be maintained through much of 2013," NAB analysts said. “With the US federal election around the corner, we don’t expect any US intervention in the Middle East this year. But coming into 2013, a greater premium may need to be factored in."

Reuters technical analyst Wang Tao said charts suggest Brent could end its current modest rebound and fall again towards $105.35, while US oil may pull back towards resistance at $87.70, before falling to $85.19. Reuters