Brent rises on positive data

Brent steadies01 August 2013, News Wires – Brent crude futures rose towards $108 a barrel on Thursday as robust economic data from the US and China brightened the outlook for demand in the world’s two largest oil consumers.

Investors were also encouraged as the US Federal Reserve, at the end of a two-day meeting, showed no signs of reducing the economic stimulus that has broadly underpinned prices for commodities.

Brent crude futures had gained 14 cents to $107.84 a barrel early on Thursday, after ending July with their largest monthly percentage gain since August 2012.

US crude futures climbed 31 cents to $105.34, having settled nearly 2% higher the day before.

“The Fed has implied they are not rushing to shrink (their stimulus programme), so that’s given positive sentiment to the market,” said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo.

The US central bank on Wednesday said the economy continued to recover but was still in need of support, offering no signs that it is planning to curb its bond-buying stimulus at its next meeting in September. Any tapering could boost the US dollar, dragging on assets denominated in the currency.

Data which showed US private employers kept adding jobs in July at the same rate as the month before, fuelled optimism over the outlook for the US economy.

In China, official numbers showed better-than-expected growth in factory activity, although a private survey showed the weakest reading since August 2012.

“While the positive official PMI data will provide support to crude oil prices in the short-run, it does not alter our view of slower growth in China and dampened oil demand, with the HSBC PMI data continuing to contract,” said Chen Hoay Lee, an investment analyst at Phillip Futures in Singapore.

“As Chinese policymakers attempt to rebalance the economy away from investment-and-export-driven growth towards consumption-driven growth, we expect this to affect growth adversely in the short-run.”

Gains in oil prices were capped after a US Energy Information Administration report showed crude stockpiles had unexpectedly risen.

Analysts said that should be bearish for crude, although US oil prices extended gains above $1 a barrel shortly after the data.

But Brent got further support on concerns over supplies from the Middle East and North Africa, with Libya’s oil exports slumping 70% as some ports shut due to protests.

Opec crude output hit a four-month low in July as unrest and conflict in Libya and Iraq disrupted supplies, a Reuters survey found on Wednesday, a further unplanned cutback bringing supply closer to the organisation’s target.

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