Brent crude rose to $103 a barrel as some investors cautiously returned to oil on Friday, a day after a steep decline sparked by the U.S. Federal Reserve’s plans to wind down its stimulus programme.
Brent crude was up 87 cents to $103.02 by 0848 GMT. U.S. oil was up 61 cents at $95.75. On Thursday, crude posted its biggest daily loss since November with Brent ending down $3.97 and U.S. oil finishing $2.84 lower. Prices were supported by concern about potential supply disruptions in the Middle East, with violence in Syria threatening to engulf neighbouring countries.
World shares, bonds and commodities steadied on Friday following the broad market rout. For oil, demand growth concerns following weak manufacturing data from China, the world’s second biggest oil consumer, added further pressure.
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“Ultimately, the United States being off the intravenous dip will be a good thing as it will give the economy a chance to stand on its feet,” said Ben Le Brun of OptionsXpress in Sydney. “But investors are looking at the near-term impact of a withdrawal in the stimulus.”
China’s factory activity weakened to a nine-month low in June as demand faltered, adding to data pointing to a sluggish economy and raising the chances the country could miss its growth target of 7.5 percent for this year.
“A slowing of China’s manufacturing sector certainly suggests that oil demand growth from the world’s largest oil demand growth engine will also certainly slow,” said Dominick Chirichella of Energy Management Institute.
“The likelihood of supply continuing to outstrip demand is going to continue going forward.”
