(Corrects first paragraph to show oil heading for third week of
gains, not sixth)
* China official PMI up but slightly lower than expected
* Middle East tension stokes supply worries
* Coming Up: U.S. nonfarm payrolls at 1330 GMT
By Ron Bousso
LONDON, Feb 1 Brent crude oil rose towards $116
on Friday, heading for a third consecutive week of gains on
rising economic optimism and tension across the Middle East, the
world's biggest oil region.
Brent is on track to post its biggest weekly gain in
two months while U.S. crude is set to rise for an eighth
straight week, matching a similar winning streak in July-August
Brent futures for March rose 25 cents to $115.80 a barrel by
1100 GMT, after an earlier high of $115.93, its highest since
mid-October. U.S. crude, also known as West Texas Intermediate
or WTI, was down 25 cents at $97.24.
Investors awaited U.S. nonfarm payrolls data, due at 1330
GMT, for evidence of the strength of the U.S. economy and signs
that sluggish fuel demand will improve. The data were expected
to show a rise of 160,000 jobs and a steady unemployment rate.
Analysts writing for U.S. brokerage Jefferies Bache said the
non-farm payrolls data could be a trigger to propel markets
upwards and could even push U.S. crude towards $100 per barrel,
a level not seen since mid-September:
"Surprises will fall toward the bullish side with WTI
resuming an upward path that we see extended to the $100 area
within about a one-week time frame."
Harry Tchilinguirian, oil analyst at BNP Paribas in London
agreed, saying the market could move higher after the data.
"We are going to be looking for the U.S. nonfarm payrolls
and how well the jobs market is doing," Tchilinguirian said.
The growing optimism over the U.S. economic recovery was
shaken this week after data showed the economy unexpectedly
contracted in Q4.
However, the U.S. Federal Reserve's decision to leave in
place its bond-buying stimulus plan, known as quantitative
easing, boosted oil markets which benefit from a weaker dollar.
A pair of surveys on China's factory output offered
diverging views on the pace of the recovery of the world's
second largest oil consumer.
The official purchasing managers' index (PMI) missed market
expectations, underscoring that the economy is making only a
mild recovery from its weakest year since 1999. But a private
PMI survey released by HSBC showed growth among manufacturers
quickening to a two-year high.
Supply worries stemming from conflict in the Middle East
have helped support Brent, the main gauge for global oil prices.
Syria protested to the United Nations on Thursday over an
Israeli air strike on its territory and warned of a possible
U.S. Secretary of State Hillary Clinton urged Iran and
Russia on Thursday to rethink their support for Syria, saying
the most dire scenarios of the conflict spilling beyond its
borders could come to pass.
Tension over Iran's uranium enrichment plan continued to
bubble after a plan to upgrade its refining equipment was
delivered to the U.N. nuclear agency.
(Additional reporting by Jessica Jaganathan in Singapore;
eiting by Christopher Johnson)