LONDON — Brent crude oil rose above $110 a barrel yesterday after stronger Chinese manufacturing data suggested the world economy would avoid a double-dip recession, supporting fuel consumption.
China’s vast manufacturing sector picked up in October, snapping a three-month contraction and underscoring the resilience of the world’s second-largest economy and top energy consumer, according to HSBC’s China Flash Purchasing Managers’ Index (PMI).
The PMI data, which rose to 51,1 in October from September’s 49,9, soothed investor fears of an abrupt slowdown in China’s economy that could send an already fragile world economy into recession.
Brent crude LCOc1 was up 50 cents at $110,06 a barrel by 0835GMT, down from an intraday high at $110,94 a barrel.
Brent prices have risen by about 16% so far this year and are heading for a third straight year of gains.
US crude CLc1 rose 50 cents to $87,90 a barrel, after reaching an intraday high of $88,65 a barrel.
“The Chinese PMI number is better than expected and I think that is one of the main reasons for the rise,” Christophe Barret of Credit Agricole said. “Prices are volatile so the price could be corrected later in the day.”
Investors were also encouraged by signs that a summit of eurozone leaders tomorrow could produce a viable solution to the eurozone debt crisis, although sharp differences remain over the size of losses private holders of Greek government bonds will have to accept.
European shares rose in early trade yesterday on optimism that policymakers were closer to an agreement on measures to tackle the eurozone sovereign debt crisis.
By 0835GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0,35% at 981,53 points, after rising 2,5% on Friday, and notching up four weeks of gains.
“On the EU side there is still much uncertainty around talks for a solution to the eurozone debt crisis and we are waiting for something more clear to emerge from the meetings,” Barret added.
The Brent-WTI spreads were at $22,16, down from record high levels of $27,88 at the October 14 close.