Monday 25 June 2018

Brent rises above $123 on China data

Singapore, April 2, 2012

Brent crude rose above $123 on Monday after positive manufacturing data from China eased fears of a sharp economic slowdown in the world's second-largest oil consumer and continuing tension in the Middle East threatened crude supplies.     

China's official Purchasing Managers' Index (PMI) , which highlights activity at large factories, beat expectations to hit an 11-month high of 53.1 in March, data showed on Sunday.      

Investors have been worried about Chinese growth losing steam as policymakers aim for a more sustainable economy that is less vulnerable to rising prices.      

Front-month Brent crude gained 31 cents to $123.19 a barrel. The benchmark ended the first quarter on Friday up $15.50, its biggest quarterly rise since the first quarter of 2011.     

US crude futures rose 26 cents to $103.28, after rising by more than 4 per cent in the previous quarter.     

"The Chinese PMI numbers were much better than expected and that would have an impact on oil. This will help answer some of the questions over a potential hard landing in China," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.     

Asian shares were also higher on Monday, as risk appetite returned on China's manufacturing data.

However, the pickup in production at large factories was attributed to an expected increase as winter ends, and economists warned against reading too much into the stronger-than-expected figure.     

Further boosting optimism over China's growth prospects, Vice Premier Li Keqiang said on Monday the government's top priority is to boost domestic consumption to maintain relatively strong economic growth.        

Oil prices were also boosted by the continued prospect of supply disruptions, after US President Barack Obama vowed to forge ahead with tough sanctions on Iran and Iraq's autonomous Kurdistan region halted oil exports on Sunday in a dispute with Baghdad over payments.       

Obama said on Friday there was enough oil in the world market - including emergency stockpiles - to allow countries to cut imports from Iran.      

Adding to fears of a potential supply squeeze, Sudan and South Sudan on Sunday accused each other of launching attacks in the oil-producing area straddling their border after a delay in talks aimed at ending the worst hostilities since Juba declared its independence.      

A Reuters survey showed OPEC oil output rising in March to its highest since October 2008 as higher Iraqi and Libyan output offset less production in Iran.      

Iraq's crude oil exports rose to 2.317 million barrels per day (bpd) in March from 2.014 million bpd in February, the head of the State Oil Marketing Organisation (SOMO) said on Sunday. – Reuters

Tags: Middle East | China | Singapore | Brent Crude | Supplies |


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