Brent Above $110 As Global Demand Outlook Improves
Brent crude oil made its way above $110 as global demand outlook rose and supplies tightened. The commodity traded at $110.44 at 6:15 GMT on Thursday after receiving a lift from Chinese PMI data.
On Thursday morning, data from China showed that the nation’s manufacturing sector was gaining momentum. Reuters reported that China’s HSBC Manufacturing PMI reading was up to 49.7 in May, a five month high for the nation.
Although the figure far surpassed expectations of 48.1, it still fell below the 50 point mark, which indicates contraction.
The US Federal Reserve’s policy meeting minutes also kept the commodity buoyant as they confirmed that the bank was planning to stay the course with its economic support.
Also supporting Brent prices was US inventory data which showed that the nation’s stocks fell 7.2 million barrels last week, far surpassing expectations of a 750,000 barrel increase.
On the supply side, conflict in Libya kept oil prices buoyant as rebels and government forces clashed in the nation’s capitol. On Wednesday Tripoli suffered heavy fighting with reports of anti-aircraft guns being used. Despite the government’s deal with rebel groups, most of Libya’s major oil export terminals remain closed.
This week, Libya’s oil output rose modestly to 230,000 barrels per day from last week’s 210,000 bpd; but the figures are still well below the nation’s full capacity of 1.6 million bpd.
Moving forward, investors will be watching for more economic data for clues about global demand in the upcoming travel season. Most importantly, investors will have their eyes on eurozone manufacturing PMI, due out later in the day.
If the figures are positive, it will likely push Brent to end the week with a gain.
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