* U.S. manufacturing activity near 3-1/2-year high
* Buzzard oilfield may be shut for another week
* Strong dollar weighs on oil prices
* Coming up: API weekly oil stock report at 2030 GMT
By Jacob Gronholt-Pedersen
SINGAPORE, Sept 3 Brent crude rose towards $101
a barrel on Wednesday, pulling away from a 16-month low hit in
the previous session, supported by encouraging U.S.
Benchmarks on both sides of the Atlantic plummeted the day
before on a stronger dollar and the prospect of slowing oil
demand growth in China and Europe.
U.S. manufacturing activity hit a nearly 3-1/2-year high
last month and construction spending rebounded strongly in July,
data showed, raising hopes of higher oil demand in the world's
biggest consumer of the commodity.
"The weak factory data in China and Europe led to concerns
over demand destruction, and that's why prices dropped," said
Avtar Sandu, a senior commodities manager at Phillip Futures in
"The oil market is mainly driven by the demand side now. We
don't see many issues on the supply side, and at the moment
investors are hardly paying any attention to all the
geopolitical events going on," he said.
Brent crude for October delivery was up 37 cents at
$100.71 a barrel by 0307 GMT, after closing down $2.45 at its
lowest settlement since May 1, 2013.
U.S. crude was trading 39 cents higher at $93.27 a
barrel. The contract had settled $3.08 lower than Friday's
close, the lowest since Jan. 14. There was no trading in the
United States on Monday because of the Labor Day holiday.
A stronger dollar weighed on oil prices, after the currency
rose to its highest since July 2013 against a basket of major
currencies on Tuesday. A stronger greenback makes it more
expensive for oil importing countries to buy the
U.S. CRUDE STOCKS
U.S. crude oil and refined product stockpiles were forecast
to have dropped in the week to Aug. 29, with crude oil stocks
projected to have fallen by 1 million barrels, a preliminary
Reuters survey of seven analysts showed on Tuesday.
The weekly oil inventory report from industry group American
Petroleum Institute (API) due at 2030 GMT.
The more closely watched report from the U.S. Department of
Energy's Energy Information Administration (EIA) is due on
Thursday. Both reports have been delayed by a day due to
A prolonged shutdown of the Buzzard oilfield in the North
Sea could help to ease a glut of crude that has built in the
Atlantic basin. The 200,000 barrel-per-day field may be shut for
"up to 10 consecutive days" starting from Aug. 30 when output
was last stopped, Calgary-based Nexen said on Tuesday.
Buzzard is closely watched by oil traders worldwide as it is
the biggest contributor to the Forties oil stream, the largest
of the four physical crude grades that underpin the Brent
EU officials proposed sanctions on Tuesday to starve Russian
firms of cash as punishment for Moscow's role in Ukraine, where
rebels said they were storming a key airport.
Russia's oil output rose 1 percent to 10.52 million barrels
per day (bpd) in August, showing that energy supplies so far
have not been affected by sanctions over the country's military
invasion of Ukraine.
(Reporting by Jacob Gronholt-Pedersen; Editing by Joseph