The prospect that a strengthening US economy could persuade the Federal Reserve to begin bringing the curtain down on its easy money policies dampened sentiment, however, as there will be less money available to invest in commodity markets.
Brent crude oil futures edged higher by 11 cents to $111.72 a barrel early on Monday, after rising more than $1 in the previous session.
US crude oil futures gained 18 cents to $97.83, after ending on Friday with its largest weekly percentage gain since 5 July.
“The US and China are two big growth engines of the world economy so any improvements in terms of their economies is going to reflect well in future crude oil demand,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
“But offsetting that is the potential for early tapering coming out of the US economy. If they spring a surprise in the markets in December, then I think that will be a negative for oil prices overall because there’s not as much money finding its way into the commoditymarket overall, and in turn to risk assests.”
US data released on Friday showed the jobless rate fell last month to its lowest since November 2008, fuelling speculation that the Fed might act when it holds its next policy meeting on 17 – 18 December.
And China released trade figures on Sunday that showed exports well above forecasts in November, rising 12.7% from a year earlier, while imports up 5.3% added to recent signs that economic growth is stabilising.
Crude imports by China, the world’s second largest consumer, reached 5.73 million barrels per day in November, up 19.1% from the previous month on a daily basis.
China is due to release its industrial output data on Tuesday.
The focus on the Fed’s upcoming meeting is expected to dominate sentiment for the days ahead.
“The market is probably prepared to sit back and wait in view of the fact that there’s been a pretty significant rally over recent days that tilts the balance against more aggressive buying as we are already well off the lows,” said Ric Spooner, chief market analyst at CMC Markets.
A decline in US crude inventories after a 10-week increase had buoyed prices along with Friday’s jobs data.
Oil prices were also supported after Transcanada said the Keystone pipeline would be in service by next month to deliver crude from US storage hub Cushing, Oklahoma, to refining markets.
Weather-related production outages also supported prices, analysts said.
North Sea oil producers cut output and moved staff from some platforms as a major storm blasted toward mainland Europe in what meteorologists warned could be the worst weather to hit the continent in years.
Cold weather also dented oil and gas production in the US and could further crimp output in top crude-producing states, such as Texas and North Dakota.