Brent Crude Climbs on Upbeat Economic Reports
NEW YORK – Brent crude futures climbed to their highest level in nearly three months as traders bet that a series of upbeat economic reports across the globe would boost oil demand.Brent crude for January delivery on ICE Futures Europe rose as much as $2.64, or 2.4%, to $112.34 a barrel, reaching its highest price since Sept. 13. The European benchmark, considered to be a gauge of world oil prices, hadn’t traded near $112 a barrel since mid-October.
The contract was recently up $2.32, or 2.1%, at $112.08 a barrel. Brent’s sharp gains also lifted U.S. prices, which added $1.08, or 1.2%, to $93.77 a barrel.
“Better news on the manufacturing front, will translate to better economic growth and higher demand for oil,” said Andy Lipow, president of Lipow Oil Associates, a consulting firm.
Oil prices began their ascent after traders digested a reading from China’s official Purchasing Managers’ Index, which came in at 51.4 for November, a figure better than economists had expected and above the 50-point level, which indicates expansion.
The PMI, which is a gauge of the country’s manufacturing health, is important to oil-market investors because China has accounted for roughly 10% of oil demand in recent years, according to the International Energy Agency.Market participants were also encouraged by similar data from both the U.S. and U.K. A report from the Institute for Supply management showed that U.S. manufacturing activity unexpectedly rose to 57.3 last month, up from 56.4 in October. The reading was the highest since April 2011.
Meanwhile, activity in U.K. factories soared to the highest level since February 2011. Data provider Markit and the Chartered Institute of Purchasing and Supply’s monthly purchasing-managers index for the manufacturing sector rose to 58.4 in November, up from October’s revised 56.5 reading.
The stronger-than-expected economic news eased some of the concerns over a glut of crude supplies, particularly in the U.S., and came two days before a scheduled meeting of the Organization of the Petroleum Exporting Countries.
The oil cartel, which has kept its production target at 30 million barrels a day the past two years, isn’t expected to boost its output despite a resurgence in Iraqi exports and some tensions among members about the potential return of more Iranian crude to the global market.
– WALL STREET JOURNAL