Oil climbs towards US$114 on promising economic data
LONDON, Jan 25 — Oil prices rose towards US$114 (RM347) a barrel today as robust economic data from the United States, China and Germany lifted the outlook for global fuel demand.
The overall positive global economic data has boosted investor appetite for riskier assets, buoying some commodities and global equities.
Manufacturing in China and the United States grew this month at the quickest pace in about two years.
And Germany's business climate index, published today by the Munich-based Ifo think tank, showed morale rising to its highest in over half a year, adding to evidence Europe's largest economy is gathering speed.
Brent crude rose 48 cents to US$113.76 a barrel by 1352 GMT. US crude rose 53 cents to US$96.48.
The North Sea crude benchmark was on track to post a second week of gains as it remains on the highest level in more than three months.
"The moves in the oil prices have in recent days been slow as a result of low volatility, but we still have an upward trend since December," said Harry Tchilinguirian, an analyst at BNP Paribas.
"If you put the pieces of the macro data together you see that the environment is improving for oil and that the risks for the global economy posed by the US fiscal cliff and the euro zone's slow economic recovery are receding," he added.
Employment in the United States also improved with the number of new claims for jobless benefits dropping to a five-year low last week.
"The short-term uptrend on Brent remains intact, even though we still believe that fundamentally there are few reasons to rally at the moment. Global risk appetite is set to dictate direction today, though some pre-weekend profit taking is still possible," Andrey Kryuchenkov said in a note to clients.
Investors are also closely watching the Seaway oil pipeline, after its operator reduced on Wednesday the oil flow rate to the US Gulf Coast from Cushing by more than half, to 175,000 barrels per day (bpd).
The 400,000 bpd pipeline is a critical link intended to ease the glut at WTI contract's delivery point in Cushing, Oklahoma.
Trading sources have said the pipeline could be back to full capacity soon.
Its operator Enterprise Products Partners has no timetable for restoring full flows through the pipeline, a company spokesman said.
"Refinery turnarounds, rising production of Canadian oil sands and Bakken shale will compete to keep pipelines congested in the first quarter," said Stephen Schork, editor of The Schork Report, an energy research letter.
Despite the volume cut, front-month US crude prices are on track for a seventh straight week of gains. — Reuters