Oil market heads higher on China data
World oil prices rose on Wednesday, rebounding from sharp losses earlier this week, as traders absorbed upbeat Chinese manufacturing data ahead of the weekly snapshot of US energy inventories.
New York's main contract, light sweet crude for delivery in October, climbed by 65 cents to 72.57 dollars a barrel.
Brent North Sea crude for October delivery added 80 cents to 75.44 dollars in midday deals.
"Crude oil prices (in New York) rebounded slightly towards 73 dollars per barrel, as stronger than expected economic indicators from China lifted sentiment about the global economic recovery," said Sucden analyst Myrto Sokou.
"The softer US dollar added further support to the energy market," she added.
A weaker greenback tends to stimulate demand for dollar-priced crude, which becomes cheaper for buyers using stronger currencies.
Elsewhere, data showed that manufacturing strengthened last month in China -- the world's second biggest energy-consuming nation after the United States.
The turnaround was underpinned by domestic orders, but analysts warned that demand in the United States and Europe -- major buyers of Chinese-made shoes, electronic gadgets and clothes -- would weaken in the coming months.
The HSBC China Manufacturing PMI, or purchasing managers index, rose to a three-month high of 51.9 last month from 49.4 in July.
A separate survey published by a government agency -- the China Federation of Logistics and Purchasing (CFLP) -- showed manufacturing activity reached 51.7 last month compared with 51.2 in July.
A reading above 50 means the sector is expanding, while below 50 indicates a decline.
Later on Wednesday, at 1430 GMT, the US government's Department of Energy (DoE) will publish its report on American oil inventories for the week ending August 27.
Crude stockpiles are expected to climb by 800,000 barrels, according to analysts polled by Dow Jones Newswires. Gasoline or petrol reserves are predicted to jump by 4.765 million barrels.
On the economic data front, traders will also absorb industrial manufacturing numbers later on Wednesday, as well as key employment figures on Friday.
"Choppy trading is to be expected with macro trading still dominating the energy space amid fears over a global economic recovery slowdown," said VTB Capital analyst Andrey Kryuchenkov.
Oil prices had fallen sharply on Monday and Tuesday, making a poor start to the week, as traders fretted over the pace of the US economic recovery and growing fuel inventories.
© 2010 AFP