Oil price jumps on strong Chinese data

1st November 2010, Comments 0 comments

The price of oil soared briefly above 85 dollars a barrel on Monday following strong manufacturing data from China, the world's biggest consumer of energy.

Brent North Sea crude for delivery in December delivery jumped 1.71 dollars to 84.96 dollars a barrel in afternoon London trade, having earlier touched 85.54.

New York's main contract, light sweet crude for December, soared 1.91 dollars to 83.34 dollars per barrel.

The dollar hit a 15-year low point of 80.22 yen on Monday and sank against the euro early in the day before gaining ground on the single currency on stronger than expected US manufacturing data.

A weaker greenback makes dollar-denominated oil cheaper for buyers holding rival currencies, boosting demand for the commodity.

"The dollar has weakened some, and oil is following in the opposite direction," said Victor Shum, an analyst at energy consultants Purvin and Gertz.

Traders also pored over data showing that Chinese manufacturing activity hit a six-month high in October, a sign that recovery in the world's second-biggest economy has consolidated.

The HSBC China Manufacturing purchasing managers index (PMI) rose to 54.8 in October from 52.9 in September as production and new orders continued to rise.

A reading above 50 means the sector is expanding, while anything below 50 indicates a decline.

Elsewhere, Saudi Oil Minister Ali al-Nuaimi said Monday that current oil prices at above 80 dollars a barrel are within a "very comfortable zone."

"I would say we are in a very comfortable zone," he said in answer to a question after giving a keynote speech at an energy forum in Singapore.

"I believe this zone should continue for some time and I will not predict for how long. I hope it will be longer than most people think," said the minister, whose country is the biggest producer in the OPEC oil cartel.

"Producers, consumers and companies are all happy with this price," he said, adding however that the crude market is "a little bit oversupplied."


© 2010 AFP

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