* China PMI hit four-month high in August
* Libya's Marsa al Brega port to handle oil cargoes next few
* Investors eye Sept tapering by U.S. Federal Reserve
* Coming up: Euro zone Markit Manufacturing Flash PMI; 0758
By Florence Tan
SINGAPORE, Aug 22 Brent crude held above $109 a
barrel on Thursday as upbeat data from China kindled hopes for
better demand from the world's second largest oil consumer, but
signs that OPEC producer Libya may resume exports dragged on
Activity in China's manufacturing sector hit a four-month
high in August as new orders rebounded, a preliminary survey
showed. This added to promising reports for July ranging from
factory output, exports to retail sales, reinforcing signs of
stabilisation in the world's No.2 economy.
"This is a good sign. Commodity prices should bounce from
these levels," ANZ analyst Natalie Rampono said, but added that
prices would be pressured if an expected roll back in the U.S.
Federal Reserve's stimulus next month comes to pass.
"We're expecting a 70 percent chance for the Fed to start
tapering in September," Rampono said. "That should have a
negative impact, in particular, on U.S. crude."
Brent crude edged down 27 cents to $109.54 a barrel
by 0356 GMT. U.S. crude was at $103.69, down 16 cents.
Losses in the U.S. benchmark were partly driven by signs
that companies were diverting oil to the depleted Cushing,
Oklahoma storage hub for the first time in 12 months. The
Brent-WTI spread CL-LCO1=R widened to more than $6 for the
first time since June on Wednesday.
WANING SUPPORT FROM GEOPOLITICAL TENSIONS
Oil's support from geopolitical tensions in the Middle East
and Africa has eased just a touch, Rampono pointed out.
Libya's Marsa al Brega port, which local sources said
reopened on Tuesday, may handle oil cargoes in the next few
days, a shipping source close to the trade said.
But the worst disruption to Libya's oil sector since the
civil war of 2011 continued, with the largest terminals, Es
Sider and Ras Lanuf, still blocked by protesters for nearly four
A political crisis in Egypt has also stoked supply worries
as the country is home to the Suez Canal and the Sumed pipeline,
which together carry around 4.5 million barrels per day of oil
between the Red Sea and the Mediterranean.
The Egyptian army has said it will guarantee the safety of
the canal and pipeline but any disruption could have a major
impact on oil prices.
For now, prices are not expected to see much of an upside
from the geopolitical worries, Rampono said.
"Markets have factored in production cuts from Libya and
there's no issue of exports disruption at the Suez Canal."
(Editing by Himani Sarkar)