02 April 2012, Sweetcrude, HOUSTON – Crude oil rose above $123 on Monday as positive manufacturing data from China doused fears of a sharp economic slowdown in the world’s second-largest oil consumer.
Also. continuing tension in the Middle East threatened supplies, helping to push up prices.
Figures for China’s official Purchasing Managers’ Index (PMI), which highlights activity at large factories, beat expectations to hit an 11-month high of 53.1 in March.
At early Monday’s trading. front-month Brent crude rose 23 cents to $123.11 a barrel. The benchmark ended the first quarter on Friday up $15.50, its biggest quarterly rise since the first quarter of 2011.
US crude futures rose 16 cents to $103.18, after rising by more than 4% in the previous quarter.
“The Chinese PMI numbers were much better than expected and that would have an impact on oil. This will help answer some of the questions over a potential hard landing in China,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
Asian shares were also higher on Monday, as risk appetite returned on China’s manufacturing data.
However, the pickup in production at large factories was attributed to an expected bump as winter ends, and economists warned against reading too much into the stronger-than-expected figure.
Oil prices were also boosted by the continued prospect of supply disruptions, after US President Barack Obama vowed to forge ahead with tough sanctions on Iran and Iraq’s autonomous Kurdistan region halted oil exports on Sunday in a dispute with Baghdad over payments.
Adding to fears of a potential squeeze, Sudan and South Sudan on Sunday accused each other of launching attacks in the oil-producing area straddling their border after a delay in talks aimed at ending the worst hostilities since Juba declared its independence.
A Reuters survey showed OPEC oil output rising in March to its highest since October 2008 as higher Iraqi and Libyan output offset less production in Iran.
Iraq’s crude oil exports rose to 2.317 million barrels per day in March from 2.014 million bpd in February, the head of the State Oil Marketing Organization (SOMO) said on Sunday.