23 September 2014, News Wires – Brent crude rose above $97 per barrel on Tuesday after a survey showed China’s factory activity unexpectedly picked up in September, helping brighten the demand outlook in a market that has been weighed by a supply glut.
The HSBC/Markit Flash China Purchasing Managers’ Index (PMI) rose to 50.5 in September from 50.2 in August, beating analysts’ expectations for a reading of 50, as orders increased.
Brent for November delivery was up $0.33 at $97.30 per barrel by Tuesday morning, after falling by more than a dollar on Monday.
US crude rose $0.41 to $91.28 per barrel, rebounding from a session low of $90.58 that was its weakest since 11 September.
The better-than-expected China PMI fuelled the recovery in prices, said Phillip Futures senior manager for commodities Avtar Sandu.
“The market was really oversold earlier and there was not much room for prices to go further down,” Sandu said.
The PMI survey also showed that a factory employment index slumped to a five-and-a-half-year low.
Finance Minister Lou Jiwei said at the weekend he would not dramatically alter policy because of any one economic indicator, cooling any speculation of swift, aggressive action to boost growth.
Keeping oil price gains in check are persistent concerns over a well-supplied market that had pushed Brent down by more than 5% so far in September, with the oil benchmark on track for a third straight monthly fall.
But Saudi Oil Minister Ali al-Naimi on Monday appeared to downplay worries about the impact of sinking crude oil prices, which had fuelled recent speculation that Opec could reduce oil output which would be its first formal production cut since the 2008 financial crisis.
Opec members, many of whom need oil prices above $100 per barrel to meet budgetary needs, will review oil output policy at a meeting on 27 November.
But any cuts will only happen next year Anjkit Pahuja, a commodity strategist at ANZ investment bank told Reuters.
“There’s still an overhang of supply which is keeping market depressed,” he added.