Brent Climbs Above $97 After China PMI Tops Forecast
Singapore: Brent crude rose above $97 per barrel on Tuesday after a survey showed China's factory activity unexpectedly picked up in September, helping brighten the demand outlook in a market that has been weighed by a supply glut.
The HSBC/Markit Flash China Purchasing Managers' Index (PMI) rose to 50.5 in September from 50.2 in August, beating analysts' expectations for a reading of 50, as orders increased.
Brent for November delivery was up 15 cents at $97.12 a barrel by 0646 GMT (12:16 p.m. in India), after falling by more than a dollar on Monday.
US crude rose 31 cents to $91.18 a barrel, rebounding from a session low of $90.58 that was its weakest since September 11.
The better-than-expected China PMI fuelled the recovery in prices, said Avtar Sandu, senior manager for commodities at Phillip Futures.
"The market was really oversold earlier and there was not much room for prices to go further down," Mr Sandu said.
The PMI survey also showed that a factory employment index slumped to a 5-1/2-year low. Finance Minister Lou Jiwei said at the weekend he would not dramatically alter policy because of any one economic indicator, cooling any speculation of swift, aggressive action to boost growth.
Keeping oil price gains in check are persistent concerns over a well-supplied market that had pushed Brent down by more than 5 per cent so far in September, with the oil benchmark on track for a third straight monthly fall.
But Saudi Oil Minister Ali al-Naimi on Monday appeared to downplay worries about the impact of sinking crude oil prices, which had fuelled recent speculation that the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil output which would be its first formal production cut since the 2008 financial crisis.
OPEC members, many of whom need oil prices above $100 a barrel to meet budgetary needs, will review oil output policy at a meeting on November 27.
But any cuts will only happen next year, said Ankit Pahuja, a commodity strategist at ANZ investment bank.
"There's still an overhang of supply which is keeping market depressed," he added.
Copyright @ Thomson Reuters 2014
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