Brent tops $110 for first time since April
Singapore, August 2, 2013
Brent crude futures climbed above $110 a barrel for the first time since early April on Friday, as upbeat economic data raised the prospects for better global oil demand amid supply disruptions in Africa and Iraq.
US manufacturing grew in July at its fastest pace in two years, while a China industrial index beat expectations this week. European factories also snapped two years of output declines, suggesting a euro zone recession may be near its end.
A commitment to easy monetary policy by European central banks and the Federal Reserve also boosted oil prices.
Brent crude oil futures gained 29 cents to $109.83 a barrel by 0533 GMT, off an earlier level of $110.09, their highest since April 3. Brent is on track for a weekly increase of 2.5 percent after two weeks of losses.
US crude oil futures rose 46 cents to $108.35, heading for an increase of 3.5 percent on the week.
"The situation is similar to two weeks ago, with strength in US crude pushing all oil markets higher," said Ken Hasegawa, a commodity sales manager at Newedge Japan.
"A lot of people are expecting the quantitative easing to continue for longer than expected, so money is still going into the US oil markets."
The European Central Bank and the Bank of England on Thursday left their interest rates at record lows, a day after the Federal Reserve said the US economy still needed its support and made no mention of changes to its stimulus measures.
Any pullback in the Fed's easy money policies could boost the dollar and drag down assets denominated in the currency.
Investors are waiting for a US employment report due later in the day that is expected to show the jobless rate near its lowest level in more than four years, which could strengthen demand from the world's top oil consumer.
Data on Thursday showed US factory activity hitting a two-year high in July and first-time applications for jobless benefits hit a 5-1/2-year low last week.
Brent's premium over West Texas Intermediate narrowed to $1.40 a barrel as the positive data and the Fed comments pushed up prices of US crude.
"A lot of money has now seemed to have come to the US crude market and I suspect some short covering of the US crude intermonth spread is happening," said Hasegawa.
Concern over supply disruptions in Iraq, Libya and Nigeria also underpinned prices. The disruptions helped trim Opec output to a four-month low in July, a Reuters survey published on Wednesday showed.
Opec output averaged 30.25 million barrels per day (bpd), down from 30.38 million bpd in June, the survey found.
Iraq's production has come under pressure as Sunni insurgents target its northern pipeline, while technical problems curb output in the south.
"The rise in crude oil prices could also be attributed to the supply disruptions in Africa and Iraq," Chen Hoay Lee, an investment analyst at Phillip Futures wrote in a note on Friday.
"Protests in Libya's oilfields, insurgents targeting Iraq's pipeline, technical problems and oil thefts in Nigeria brought about worries about the availability of supplies."
Europe's biggest oil company, Royal Dutch Shell, said a surge in oil thefts in Nigeria contributed to a lower second-quarter profit. - Reuters