Oil gains as China factory data improve
The price of oil rose Friday on signs that China’s manufacturing is gathering strength.
Benchmark crude rose 62 cents to $86.51 a barrel in morning trading on the New York Mercantile Exchange. However, gains could be tempered by concerns over a lack of progress in key budget talks in Washington.
HSBC Corp. said the preliminary version of its monthly Purchasing Managers’ Index rose to 50.9 in December from 50.5 in November. Numbers above 50 represent expanding activity. The improvement was a sign that energy consumption might be on the upswing in China.
Still, traders are concerned that President Barack Obama and Republican leaders were far from reaching a deal to reduce the US budget deficit before the end of the year. Without an agreement, significant tax increases and government spending cuts will automatically take effect — posing the threat of recession.
Brent crude, used to set prices for international varieties of oil, rose $1.14 to $109.05 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Heating oil rose 3 cents to $2.98 a gallon.
— Natural gas lost 7 cents to $3.27 per 1,000 cubic feet, the lowest price since late September.
— Wholesale petrol added 4 cents to $2.65 a gallon.