Brent rises towards $108 on robust US, China data

Brent crude oil futures had gained 14 cents to $107.84 a barrel by 0332 GMT
A pumpjack is seen on July 22, 2013 outside Williston, North Dakota. Pumpjacks are used to mechanically pump oil and natural gas out of the earth when there is not enough natural pressure for the liquids to rise on their own. North Dakota has been experiencing an oil boom recently, brining tens of thousands of jobs to the region, lowering state unemployment and bringing a surplus to the state budget. (Getty Images)
By Reuters
Thu 01 Aug 2013 10:24 AM

Brent crude futures rose towards $108 a barrel on Thursday as robust economic data from the United States and China brightened the outlook for demand in the world's two largest oil consumers.

Investors were also encouraged as the U.S. 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 oil futures had gained 14 cents to $107.84 a barrel by 0332 GMT, after ending July with their largest monthly percentage gain since August 2012.

U.S. crude futures climbed 31 cents to $105.34, having settled nearly 2-percent 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 U.S. 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 U.S. dollar, dragging on assets denominated in the currency.

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

In No.2 oil consumer 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 U.S. Energy Information Administration report showed crude stockpiles had unexpectedly risen.

Analysts said that should be bearish for crude, although U.S. 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 percent 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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