SINGAPORE, Aug 2: 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.
U.S. 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 had gained 42 cents to $109.96 a barrel by 0411 GMT, after earlier hitting $110.09, its highest since April 3. Brent is track to rise 2.6 percent on the week after two weeks of losses.
U.S. Crude oil futures rose 68 cents to $108.57, heading for a 3.7 percent increase for the week.
‘A lot of people are expecting the quantitative easing to continue for longer than expected, so money is still going into the oil markets,’ said Ken Hasegawa, a commodity sales manager at Newedge Japan.
But with global inventories adequate, he added, oil prices are unlikely to remain strong.
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 U.S. Economy still needed its support and made no mention of changes to its stimulus measures.
Any pullback on the Fed’s easy money policies could boost the dollar and drag on assets denominated in the currency.
Investors are waiting for a U.S. 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 U.S. 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 the U.S. Crude oil prices.
‘A lot of money has now seemed to have come to the U.S. Crude market and I suspect some short covering is happening,’ said Hasegawa.
SUPPLY DISRUPTIONS
Concern over supply disruptions in Libya, Iraq and Nigeria also underpinned prices. The disruptions helped trim OPEC output to a four-month low in July, according to a Reuters survey published on Wednesday.
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 are curbing output in the south.
Europe’s biggest oil company, Royal Dutch Shell, said on Thursday that a surge in oil thefts in Nigeria contributed to a lower second-quarter profit.
(AGENCIES)
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