Oil stabilises on China's strong economic data
LONDON: Brent crude futures stabilised below US$108 a barrel on Thursday on positive economic data from China after a rise in US crude stocks drove prices down sharply the previous day.
In China, the world’s second-largest oil consumer, strong new orders in October drove the biggest expansion in its manufacturing sector in seven months, a preliminary survey of purchasing managers showed, providing evidence that the Chinese economy was stabilising.
Brent crude oil was down one cent to US$107.79 a barrel by 0926 GMT after falling by more than US$2 in the previous session after figures from the US Energy Information Administration (EIA) pointed to ample supply in the top oil consumer.
US crude oil gained 42 cents to US$97.28 after ending at its lowest settlement since July 1 on Wednesday.
"Oil prices are stabilising after some heavy losses yesterday," said Christopher Bellew, an oil analyst at Jefferies Bache in London.
"Going forward, we could see Brent trade between US$107.50 and US$108.50," he said.
The Markit/HSBC Purchasing Managers Index (PMI) for China stood at 50.9 in October, above September’s final reading of 50.2 and boosting the outlook for global oil demand.
US crude stocks rose by 5.2 million barrels last week, the fifth-largest build of the year, with stocks at the Cushing hub rising for the second week in a row, Wednesday’s data showed.
The Brent/WTI spread , which touched a six-month high of US$13 on Wednesday, was at about US$10.50.
Lingering uncertainty over the future of Scotland’s Grangemouth refinery lent support to Brent prices.
Union leaders and Switzerland-based Ineos are set to enter a final round of talks on Thursday in an effort to resolve a bitter labour dispute and avert closure of the refinery and nearby petrochemical plant.
Grangemouth, which supplies most of Scotland with fuel, provides steam to a plant that processes Forties, the largest crude oil stream underpinning Brent futures.
Oil investors were likely to trade cautiously ahead of the next round of talks between Iran and six world powers over Tehran’s disputed nuclear programme, Bellew said.
Washington described last week’s negotiations as the most serious and candid to date, and the parties have agreed to meet again in Geneva on November 7-8.
Any relaxation of the sanctions regime against OPEC member Iran would push down oil prices.-- Reuters