* China HSBC flash PMI hits 7-mth high in Oct
* U.S. EIA reports big rise in U.S. crude stocks
* Brent/WTI spread narrows after widening to $13 in previous
By Jessica Jaganathan
SINGAPORE, Oct 24 Brent crude futures edged up
towards $108 a barrel on Thursday after positive economic data
from China, the world's second-largest oil consumer, helped
offset another rise in U.S. crude stockpiles that had depressed
Strong new orders in October drove the biggest expansion in
China's manufacturing sector in seven months, according to a
preliminary Markit/HSBC survey of purchasing managers, providing
further evidence the economy was stabilising.
But U.S. crude oil inventories rose by 5.2 million barrels
last week, the fifth-largest build of the year, with stocks at
the Cushing hub rising for the second week in a row, showing
there was ample supply in the world's largest oil consumer.
Brent crude oil futures had gained 11 cents to
$107.91 a barrel by 0255 GMT.
U.S. crude oil futures gained 61 cents to $97.47
after ending at $96.86 a barrel in the previous session, the
lowest settlement price since July 1.
"Brent will likely respond in a stronger way to the PMI data
as we have seen signs of stabilisation in China's growth ... but
we expect China to maintain a cautious monetary policy in the
coming months," said Vyanne Lai, an economist at National
"So unless there's some impetus from geopolitical risk in
the Middle East, we don't see Brent rising too strongly in the
She added that recent high-level talks between Iran and the
U.S., lingering uncertainties over the U.S. budget and rising
oil production in the United States and Canada pointed to weaker
oil fundamentals and would limit any gains in prices.
U.S. crude oil prices continued to outperform Brent and the
Brent/WTI spread narrowed to $10.44 after hitting
$13 a barrel in the previous session, the widest since April.
The positive news from the Markit/HSBC Purchasing Managers
Index (PMI), the earliest reading of China's monthly economic
performance, follows a pick-up in economic growth in the third
But many economists see Chinese growth slowing again as
global demand remains soft and as Beijing moves to restructure
the economy towards one driven more by consumer demand than
investment and credit.
Chinese money market rates have hit three-month highs as
regulators show signs of concern that loose liquidity might be
fuelling another round of risky credit growth.
Total U.S. crude oil stockpiles have risen by 24 million
barrels since mid-September, according to data from the U.S.
Energy Information Administration (EIA), as some 1.3 million
barrels per day (bpd) of refining capacity has been taken
Stockpiles at the Cushing, Oklahoma, delivery point for the
U.S. contract have showed builds over the past two weeks,
according to EIA data, snapping 14 straight weeks of drawdowns
that had helped support U.S. oil futures and tighten the
discount to Brent crude.