By Myra P. Saefong and Victor Reklaitis, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures edged higher on Tuesday, as growth in U.S. and Chinese manufacturing in August improved the outlook for energy demand.
October crude-oil futures CLV3 +0.30% tacked on 28 cents, or 0.3%, to $107.93 a barrel on the New York Mercantile Exchange. Floor trading was closed on Monday for the Labor Day holiday. It was trading around $107.36 before the ISM data.
On ICE Futures, October Brent crude UK:LCOV3 +0.67% rose 97 cents, or 0.8%, to $115.29 a barrel.
“We would not be surprised to see [West Texas Intermediate crude] retest its spike high of $112 and possibly head higher on prospects for increased global demand,” said Jason Rotman, president of Lido Isle Advisors in Newport Beach, Calif.
A report from HSBC showed China’s manufacturing sector expanded last month, with a final reading of that PMI coming in at 50.1. The Chinese government’s manufacturing PMI, issued separately over the weekend, also rose.
In the U.S., manufacturers expanded at the fastest pace in August more than two years, according to the closely followed ISM index. The Institute for Supply Management index rose to 55.7% from 55.4% in July.
And data on Monday showed growth in the euro zone’s manufacturing sector in August, with expansion picking up pace in Germany while it resumed in Spain. Markit’s euro-zone purchasing managers’ index for manufacturing rose to 51.4 from 50.3 in July. A reading above 50 indicates month-to-month growth. Read: We’re calling off Europe’s debt crisis after strong PMIs, says Danske Bank
Global jitters
Nymex crude prices had traded below $107 in the electronic session, pressured by the weight of a stronger greenback. The ICE dollar index DXY +0.19% , which tracks the U.S. currency against six rivals, extended its gains from Monday, rising to 82.404 from 82.118.
Strength in the greenback often pushes prices for oil and other dollar-denominated commodities lower by making them more expensive to holders of other currencies.
But Nymex oil prices trimmed some losses after Russian news agency RIA said Russia’s defense ministry had detected two ballistic ”objects” in the Mediterranean Sea, according to Reuters.
The objects were fired from the central part of the sea toward the eastern Mediterranean, but there were no reports of strikes, with the missiles thought to have fallen into the sea. The Russian Embassy in Syria said there were no signs of an attack or explosions in Damascus, according to reports. Israeli defense officials later said its military, along with a U.S. team, had conducted a missile test to check its ballistic defense capabilities.
The jitters over missiles in the region come as the U.S. is seen moving toward a military intervention in Syria after allegations that the country’s government used chemical weapons against civilians.
Speaking at the beginning of a White House meeting, President Barack Obama on Tuesday said he’s confident that Congress will approve legislation authorizing U.S. military action in Syria.
Obama is seeking congressional approval for limited military action, but some conservative and most liberal members in the U.S. House of Representatives have already raised questions about potential action in Syria.
Concerns about a strike against Syria recently helped push Nymex October crude futures above $110 a barrel last week, to mark their highest settlement since May 2011. But futures have since pulled back as risks of an imminent strike against Syria have eased.
This week, the market will watch for weekly inventory figures from the U.S. Energy Department, the analysts said.
The weekly report has been delayed to Thursday at 11 a.m. Eastern because of Monday’s U.S. holiday.
“Within the last six weeks, the price differential between the two oil types has ... widened again to a good $7 per barrel, their prices having almost converged in mid-July,” noted Commerzbank analysts in emailed comments Tuesday, referring to WTI and Brent crude. The analysts said the threat of a U.S. military strike against Syria is “causing in particular the risk premium for Brent to increase,” and Brent also has been affected by production outages in the North Sea and in Libya.
Back on Nymex, October gasoline RBV3 -1.86% was roughly down almost 2 cents, or 0.6%, at $2.87 a gallon. October heating oil HOV3 -1.42% rose less than a penny, or 0.3%, to $3.14 a gallon.
October natural gas NGV13 +1.27% gained nearly 9 cents, or 2.4%, to $3.67 per million British thermal units.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Victor Reklaitis is a New York-based markets writer for MarketWatch. Follow him on Twitter @VicRek. Carla Mozee in Los Angeles contributed to this report.
