February 1, 2013 / 7:41 AM / 5 years ago

CORRECTED-UPDATE 3-Oil climbs towards $116 ahead of U.S. jobs data

(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 (Reuters) - 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 2004.

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 “surprise” response.

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)

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