Brent Rises on Chinese Optimism
Brent climbed above $109 on Monday after new positive Chinese data gave investors hope for demand in the future. The commodity traded at $109.26 at 7:43 GMT on Monday morning.
New business orders in the number two oil consuming nation recovered from multi-year lows and helped China's services sector expand. After weeks of tepid economic data, many were expecting to see a contraction.
Some believe that the positive data has set the tone for several other economic indicators due out from China this week. However, despite the surprise expansion in China's service sector, most are betting the string of economic data this week will reveal a slowdown.
CNBC reported that some analysts who see poor numbers coming in this week are considering that a positive for oil prices anyway. With the Chinese government ready to step in and do whatever it takes to keep the economy from grinding to a halt, poor data could prompt new stimulus policies which would be seen as a positive.
Brent prices also found support after supply interruptions on Friday reminded investors of the tentative situation in the Middle East and Africa. Libyan oil exports have been reduced to less than half of their normal levels after strikes and protests kept several major terminals from functioning. The slowdown has been named one of the worst disruptions Libya has faced in the past year.
However, geopolitical tension affecting oil prices could ease in the near future as the US and newly elected Iranian President Hassan Rouhani recently committed to renewing diplomatic efforts to end the dispute over Tehran's nuclear capabilities. Sanctions on Iranian oil due to the dispute have kept Brent prices above $100 for the better part of the past two years.
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