Brent near $111 on uptick in China economy, US stock draw
Brent crude hovered near $111 as the Chinese economy showed further signs of recovery, bolstering the outlook for oil demand, although the upside was limited as a ceasefire in the Gaza Strip eased concerns over supply.
China's vast manufacturing sector saw expansion accelerate in November for the first time in 13 months, while a surprise drop in U.S. oil inventory also supported crude prices. But supply risks diminished after Israel and the Islamist Hamas movement agreed on Wednesday to an Egyptian-sponsored ceasefire to halt the eight-day conflict around Gaza.
Brent crude futures slipped one cent to $110.85 a barrel by 0507 GMT, after earlier rising to a session high of $111.17. U.S. crude climbed 21 cents to $87.59."I'm surprised Brent is so high ... there are a lot of predictions that all the weakness in China will eventually get sorted as the new leadership takes over, but it seems like they're not in a huge hurry to over-stimulate," said Tony Nunan, a risk manager at Mitsubishi Corp.
"The whole euro zone situation still remains unresolved, so I think what people are looking for now is for the U.S. to lead the world economy out of its slump. So the big concern is the fiscal cliff. So I think after the holiday, the discussion will be on the U.S. budget.
"U.S policymakers are looking to avoid a looming fiscal crisis, which has raised fears about the direction of the world's largest economy.U.S. stock markets are closed for the Thanksgiving holiday on Thursday.
The China HSBC Flash
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