03 June 2014, News Wires – Brent edged up near $109 per barrel on Tuesday as positive economic indicators from the United States and China lifted the fuel demand outlook in the world’s two largest oil consumers, offsetting a rise in OPEC production.
Tuesday’s survey results on Chinese services and manufacturing activity reinforced hopes that the nation’s economy is stabilising after the country’s growth slowed to an 18-month low in the first quarter.
July Brent crude rose $0.07 to $108.90 per barrel by Tuesday morning after touching the lowest since 13 May during Monday’s session. US crude for July delivery edged up $0.04 to $102.51 per barrel.
In May, China’s services sector grew at its fastest in six months, according to an official survey.
China’s export orders improved although factory activity still contracted, a private bank survey showed.
“Both [surveys] are coming largely in line with expectations, that’s why we’re seeing oil prices not really reacting at this stage,” OptionXpress markets analyst Ben Le Brun told Reuters.
“In the Asian session, we’re still playing a little bit of catch up to the US manufacturing data.”
US manufacturing activity expanded in May, but a slowdown in euro zone factory growth boosted expectations of policy easing by the European Central Bank.
“We want to see that improving picture in the global economic sense, which will indicate that there will be that demand there to pick up the oil supply,” Le Brun reportedly said.
Ample supply weighed on oil prices, with OPEC’s output forecast to rise to its highest in three months in May on increased supplies from Angola and Iraq.
Russia’s oil production is on a gradual decline, but remained above 10 million barrels per day.
Iraq has moved closer to its 3.4-million-bpd crude export target for 2014 after it started operations at a new Single Point Mooring terminal in the country’s south that can handle 800,000 bpd of oil.
Oil exports from Iraq rose by 8% in May to reach 2.582 million bpd from the previous month, the oil ministry said.
Some analysts still doubt that Iraq can meet its 2014 output target.
“Iraq’s 3.4-million-bpd export target by year-end remains optimistic, with the Kirkuk-Ceyhan pipeline not repaired and water-content issues threatening to hamper southern exports,” Citibank analysts said in a note.
Investors will scour US oil inventory data to be released later on Tuesday and Wednesday for signs of improved demand.
US commercial crude oil, distillate and gasoline stocks were expected to have risen in the week to 30 May, a preliminary Reuters poll of five analysts showed.