Oil edges over $89 as China manufacturing improves
The price of oil edged up above $89 a barrel Monday as investors were encouraged by signs that China's economy may be picking up after a prolonged slowdown.
By early afternoon in Europe, benchmark crude for January delivery was up 20 cents to $89.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 84 cents to close at $88.91 in New York on Friday.
Markets perked up after surveys by the state-sanctioned China Federation of Logistics & Purchasing and HSBC Corp. showed China's manufacturing is expanding.
"The reading marks the first improvement of manufacturing conditions in 13 months and signals the economy of the world's largest growth engine may have turned a corner," said a report from JBC Energy in Vienna.
Signs of recovery in China's economy, the world's second largest, suggest energy consumption is likely to grow or stabilize there, pushing oil prices higher.
Analysts also noted that the risk posed by the ongoing conflicts in the Middle East underpinned energy prices.
"Alongside Egypt, Syria, Iran and Gaza all remain latent trouble spots where the unrest could overspill into the oil production region in the Persian Gulf, where around a quarter of the world's crude oil is produced," said analysts from Commerzbank in Frankfurt in a research note. "Given this backdrop the oil price should remain well-supported, especially since financial investors are increasingly betting on climbing prices again."
Oil had its first monthly gain in four months in November, but is still trading below the 2012 average of $94.65 per barrel.
In London, Brent crude was up 35 cents at $111.58 on the ICE Futures exchange. In other energy futures trading on the New York Mercantile Exchange:
— Heating oil added 1.01 cents to $3.0708 per gallon.
— Wholesale gasoline was up 1.49 cents to $2.7452 per gallon.
— Natural gas retreated 0.8 cent to $3.553 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.