Brent Propped Up By Chinese Data
Brent crude oil made its way toward $110 on Monday morning, trading at $109.85 at 6:30 GMT.
The commodity was buoyed by expectations of improving global demand following the release of encouraging Chinese data.
Factory activity in China expanded at its fastest pace in five months in May, causing many to revise their expectations for the nation’s demand growth.
Although the number two oil consuming nation released a string of poor data in the first quarter, the strong PMI figures suggest that the Chinese economy could be gaining momentum.
CNBC reported that China’s official Purchasing Managers’ Index was up to 50.8 in May from 50.4 in April. The figure was above analyst expectations of a 50.6 reading.
Though oil has found support from geopolitical tension recently, an increase in production from several OPEC nations mitigated those gains.
The Organization of the Petroleum Exporting Countries reported an average output of 30.02 million barrels per day in May, significantly higher than April’s 29.58 million bpd average.
On Sunday, the Iraqi oil ministry announced that a new floating terminal was opened near the country’s southern ports. The terminal is expected to increase the nation’s shipping capacity by about 800,000 barrels per day.
Meanwhile uncertainty in Ukraine and Libya continued to raise questions about supply. In Libya, there has been little progress between rebel groups and the government to reopen the nation’s export terminals.
Despite an agreement made last month, anti-government groups retained control of some of the nation’s largest oilfields, keeping Libyan exports well below capacity.
However, the problems in both Libya and Ukraine have been priced in, so without any further escalation, geopolitical tension is unlikely to push Brent prices any higher.
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