SINGAPORE, June 3 (Reuters) – Brent edged up near $109 a barrel on Tuesday, just off a three-week low, as positive economic indicators from the United States and China lifted the fuel demand outlook in the world’s two largest oil consumers, offsetting a rise in OPEC production.
Tuesday’s survey results on Chinese services and manufacturing activity reinforced hopes that the nation’s economy is stabilising after the country’s growth slowed to an 18-month low in the first quarter.
July Brent crude LCOc1 rose 7 cents to $108.90 a barrel by 0351 GMT after touching the lowest since May 13 during Monday’s session. U.S. crude for July delivery CLc1 edged up 4 cents to $102.51 a barrel.
In May, China’s services sector grew at its fastest in six months, according to an official survey. China’s export orders improved although factory activity still contracted, a private bank survey showed. (Full Story) (Full Story)
“Both (surveys) are coming largely in line with expectations, that’s why we’re seeing oil prices not really reacting at this stage,” said Ben Le Brun, a markets analyst at OptionsXpress in Sydney.
“In the Asian session, we’re still playing a little bit of catch up to the U.S. manufacturing data.”
U.S. manufacturing activity expanded in May, putting the world’s top economy seemingly on a firmer path to recovery, but a slowdown in euro zone factory growth boosted expectations of policy easing by the European Central Bank. (Full Story)
“We want to see that improving picture in the global economic sense, which will indicate that there will be that demand there to pick up the oil supply,” Le Brun said.
Ample supply weighed on oil prices, with OPEC’s output forecast to rise to its highest in three months in May on increased supplies from Angola and Iraq. Russia’s oil production is on a gradual decline, but remained above 10 million barrels per day (bpd). (Full Story) (Full Story)
Iraq has moved closer to its 3.4-million-bpd crude export target for 2014 after it started operations at a new Single Point Mooring (SPM) terminal in the country’s south that can handle 800,000 bpd of oil.
Oil exports from Iraq rose by 8 percent in May to reach 2.582 million bpd from the previous month, the oil ministry said. (Full Story)
Some analysts, though, still doubt that Iraq can meet its 2014 output target.
“Iraq’s 3.4-million-bpd export target by year-end remains optimistic, with the Kirkuk-Ceyhan pipeline not repaired and water-content issues threatening to hamper southern exports,” Citibank analysts said in a note.
Investors will scour U.S. oil inventory data to be released later on Tuesday and Wednesday for signs of improved demand.
U.S. commercial crude oil, distillate and gasoline stocks were expected to have risen in the week to May 30, a preliminary Reuters poll of five analysts showed. (Full Story)