Brent crude held above $113 on Friday, on track to post a second week of gains as positive economic data from the United States and China lifted the fuel demand outlook at the world's two largest oil consumers.
The world economy may be gaining traction after a sluggish 2012. Manufacturing in China and the United States grew this month at the quickest pace in about two years while data suggesting German growth picked up boosted hopes for a swifter euro zone recovery.
Brent crude for March delivery fell 24 cents to $113.04 a barrel by 8.43am UAE time. US crude edged down 16 cents to $95.79.
"Economic statistics from the US and China support an outlook of moderate growth in 2013 against a backdrop of a lower risk environment," Ric Spooner, chief market analyst at CMC Markets in Sydney said.
"Any improvement in industrial demand will help the overall oil demand."
In addition to the encouraging manufacturing data, employment in the United States also improved with the number of new claims for jobless benefits dropping to a five-year low last week. The positive global economic data has boosted investor appetite for riskier assets, buoying global equities and some commodities.
In the United States, investors are closely watching the Seaway oil pipeline, after its operator reduced on Wednesday the oil flow rate from Cushing to U.S. Gulf Coast by more than half, to 175,000 barrels per day. The 400,000 bpd pipeline is a critical link intended to ease the glut at the WTI contract's delivery point in Cushing, Oklahoma.
Despite the volume cut, front-month U.S. crude prices are on track for a seventh straight week of gains. Trading sources have said the pipeline could be back to full capacity soon.
Its operator Enterprise Products Partners has no timetable for restoring full flows through the pipeline, a company spokesman said.
The spread between Brent and West Texas Intermediate crude prices held around $17, after widening by nearly $2 on Wednesday.
In weekly inventories data, a larger than expected fall in gasoline stocks lifted RBOB gasoline futures by nearly 1 percent on Wednesday.
US crude stockpiles rose last week as refineries in the country processed less oil, government data from the Energy Information Administration showed.
Crude inventories rose 2.81 million barrels in the week to January 18, compared with expectations for a 1.8 million barrel rise.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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