Brent Helped By Promising Chinese Data, Gains Limited By Supply Increase

Brent continued to find support from economic data on Tuesday as reports suggested that both the US and China’s economies were picking up steam. The commodity traded at $108.97 at 7:00 GMT as increased supply from several OPEC members helped offset gains.

Reutersreported that China’s final HSBC/Markit Purchasing Managers’ Index increased to a four month high of 49.4 in May, a huge improvement from April’s 48.1 reading. The figures suggested that China’s economy was making a comeback after starting the year off slowly. The improvement has been attributed to a rise in exports as well as Beijing’s “mini-stimulus” plan which has helped drive growth. Despite the large jump from April to May, China’s PMI score remained below the 50 point level that separates growth from contraction.

PMI data from the US also showed improvement, confirming that the nation’s economy was back on track after a disappointing first quarter. Eurozone PMI figures told a different story and suggested that the region’s recovery was losing momentum. The new data added more pressure to the European Central Bank, which is widely expected to ease further at its Thursday meeting.

An oversupplied market kept a lid on Brent prices though, as OPEC’s output is forecast to increase to a three month high in May. Angola and Iraq will account for much of the boost with Iraq aiming for a 3.4 million barrel per day export target in 2014. The nation is working on opening a Single Point Mooring terminal which would have a capacity of 800,000 barrels per day.