IV:Crude oil futures rise to 1-week high on China PMI data, Fed
Investing.com - Crude oil futures rose to a one-week high on Thursday, after a stronger-than-expected reading on Chinese factory activity boosted demand expectations from the world’s second largest oil consumer.
Appetite for riskier assets was also boosted after the Federal Reserve on Wednesday gave no indications on whether it will begin to taper its stimulus program in the near future.
On the New York Mercantile Exchange, light sweet crude futures for delivery in September traded at USD105.55 a barrel during European morning trade, up 0.5%.
Oil prices moved higher after a government report released earlier in the session showed that China’s manufacturing purchasing managers' index rose unexpectedly to 50.3 in July from 50.1 in June.
A reading above 50.0 indicates industry expansion, below indicates contraction.
However, the official data differed from the final reading of the HSBC China Purchasing Managers Index, which hit an 11-month low of 47.7 in July.
China is the world's second largest oil consumer after the U.S. and manufacturing numbers are used as indicators for fuel demand growth.
Meanwhile, the Fed said on Wednesday that it would keep buying USD85 billion a month in mortgage and Treasury securities and added that the pace of economic growth is "modest".
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Market players now looked ahead to highly-anticipated data on U.S. nonfarm payrolls due on Friday for indications of how the recovery in the U.S. labor market is progressing.
Oil traders have long been taking cues from the monthly jobs report, the most-closely followed indicator of U.S. employment, because it offers insight into the economic health of the world's biggest crude-oil consumer.
An improving economy is generally correlated with increased demand for oil and fuel products like gasoline.
The September contract settled up 1.9% at USD105.03 a barrel on Wednesday, after official data showed that the U.S. economy grew more-than-expected in the second quarter of 2012.
The Commerce Department said that gross domestic product grew at a seasonally adjusted annual rate of 1.7% in the three months to June, beating expectations for growth of 1%.
The robust GDP data came after payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 200,000 in July, above expectations for an increase of 180,000.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery eased down 0.1% to trade at USD107.67 a barrel, with the spread between the Brent and crude contracts standing at USD2.12 a barrel.
