Brent Remains Above $109 On Chinese PMI
Brent crude oil remained above $109 on Thursday even as markets braced on speculation that the US Federal Reserve is planning to taper its bond buying plan in September. The commodity traded at $109.53 at 6:14 GMT after data from China signaled that the number two oil consumer was on the mend.
Data showed that China's manufacturing sector was on the rebound in August as new orders increased. Reuters reported that China's Flash HSBC Purchasing Managers Index came in at 50.1 for August. The reading only barely surpassed the 50 point benchmark that indicates growth, but showed a marked improvement from last month's reading of 47.7.
The data had a positive effect on commodities, but analysts warn that positivity in the commodities market is only temporary. The possibility that the Federal Reserve could start tapering its stimulus spending next month is keeping a lid on Brent prices as analysts say the chances of the cutbacks starting in September are looking more and more likely.
Geopolitical tension in Africa and the Middle East has also kept Brent prices afloat as several key nations battle political and social unrest; but recent news from both Egypt and Libya have eased some of that tension and removed some of the supply interruption risk. In Egypt tension between ousted President Mohamed Mursi's supporters and opponents has shown no signs of easing, but the Egyptian military has guaranteed the safety of the Suez Canal and Sumed pipeline, which carry about 4.5 million barrels per day between them.
Libya's two largest oil export terminals, Es Sider and Ras Lanuf, have been closed for almost four weeks. The closures have nearly halved Libya's oil export capacity, making it the worst disruption the country has faced since a civil war in 2011. A smaller port, called Marsa al Brega, reopened on Tuesday which has slightly improved country's export capacity.
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.