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Oil rises on China manufacturing data

Oct 25 2012 07:56
AFP

Singapore - Oil prices climbed in Asian trade on Thursday on data showing a slight pick-up in China's manufacturing sector, but weak US energy demand and eurozone worries capped gains, analysts said.

New York's main contract, light sweet crude for delivery in December was up five cents to $85.78 a barrel while Brent North Sea crude for December advanced four cents to $107.89.

HSBC's preliminary purchasing managers' index (PMI) Wednesday showed manufacturing in the world's largest energy consumer at its highest level in three months, sparking talk of "green shoots of recovery in the Chinese economy", IG Markets said in a report.

The PMI hit 49.1 this month, up from 47.9 in September. A reading above 50 indicates growth and anything below points to shrinkage.

"Yesterday's improvement in HSBC's manufacturing activity survey has got tongues wagging that the Chinese economy is bottoming out," the IG Markets report stated.

But crude gains were capped by a weekly US inventories report issued by the Energy Information Administration (EIA) showing a spike in stockpiles in the world's biggest economy.

The EIA data showed reserves jumping 5.9 million barrels in the week to October 19, more than triple analyst forecasts of a 1.9 million barrel rise.

"The overall report points to more downside risks ahead," Phillip Futures said in a market commentary.

In the eurozone, private sector business activity fell at its fastest rate since June 2009 to a 40-month low, a closely watched survey by the Markit research firm showed.

Adding to negative sentiment was news that German business confidence slumped to a two-and-a-half-year low in October.

commodities  |  markets  |  oil

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