By Jacob Gronholt-Pedersen Crude-oil futures were higher in Asian trading Monday, buoyed by a rise in Chinese manufacturing, while J.P. Morgan increased its oil-price forecast for next year. On the New York Mercantile Exchange, light, sweet crude futures for delivery in January traded at $88.96 a barrel at 0645 GMT, up $0.05 in the Globex electronic session. January Brent crude on London's ICE Futures exchange rose $0.34 to $111.57 a barrel. Oil prices gained in the previous two sessions, but both benchmarks are trading in a tight price range seen since the end of October. While tensions in the Middle East continue to underpin crude prices, particularly for the Brent contract, the focus has lately shifted more toward the demand outlook in the world's two biggest economies--the U.S. and China. Crude-oil prices rose Monday in tandem with Asian shares, as optimism for a pickup in the Chinese economy was fuelled by manufacturing data released over the weekend showing that China's official Purchasing Managers Index rose to a seven-month high in November. "The improving Chinese PMI over the weekend should put a floor [under] prices in trading today, but ongoing uncertainty in the U.S. will likely generate more sideway moves," ANZ analysts said in a note. But the main driver remains hope for a timely solution to the U.S. fiscal cliff and a possible uptick in demand, despite recent mixed signals from the Obama administration and Congress. "So far, however, the markets are pricing in a respectable solution, with failure not an option despite the current lack of progress," Saxo Bank analyst Ole Hansen said in a note. Looking further ahead, J.P. Morgan has raised its average 2013 oil price outlook for Brent crude by $2 to $115 a barrel due to a higher demand forecast and lower expected non-OPEC supply growth outside North America. The higher outlook comes as the bank raised its global crude oil demand forecast by 430,000 barrels a day next year while also lowering its supply outlook by 200,000 barrels a day. At the same time, J.P. Morgan lowered its average 2013 price outlook for West Texas Intermediate by $1.50 to $99 a barrel. The downgrade indicates a further widening of the WTI-Brent spread, as the analysts argue that U.S. refining capacity will struggle to adjust to increasing domestic supply of light, sweet crude. "We believe the wide and volatile divergence of Brent and WTI prices that emerged in 2011 and has persisted through 2012 is a precursor to a larger issue likely to emerge in North America in the next three years," J.P. Morgan analysts said. Nymex reformulated gasoline blendstock for January--the benchmark gasoline contract--rose 120 points to $2.7423 a gallon, while January heating oil traded at $3.0708, 101 points higher. ICE gasoil for December changed hands at $952.50 a metric ton, up $2.25 from Friday's settlement. Write to Jacob Gronholt-Pedersen at jacob.pedersen@dowjones.com

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