Oil prices soar on US, Chinese data, Mideast tensions

3rd January 2012, Comments 0 comments

World oil prices soared on Tuesday, underpinned by positive US, Chinese and eurozone economic data and tensions in the Middle East over transit through the Gulf, analysts said.

New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in February jumped $3.56 to $102.39 a barrel.

Brent North Sea crude for February rallied $3.64 to $111.02 in late London deals.

"Prices have moved up as the market reacts to the expansion in manufacturing activity in China," said Victor Shum, senior principal at Purvin and Gertz international energy consultants.

"Geopolitical tensions over Iran have also supported the market," he added.

Official data released Sunday showed China's manufacturing activity rebounded in December helped by holiday shopping.

The purchasing managers index (PMI) reached 50.3 in December, the China Federation of Logistics and Purchasing said. A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction.

China is the world's largest energy consumer and its economic data, particularly concerning production, strongly influences crude prices.

In US meanwhile, data Tuesday showed the manufacturing sector expanded in December more quickly than expected.

The Institute for Supply Management's manufacturing index hit 53.9, up 1.2 points from November for the fastest rate in six months.

Meanwhile, traders were closely monitoring the situation in the Strait of Hormuz, a vital oil-transit waterway from the Gulf through which 20 percent of the world's oil is transported.

Iran on Monday tested missiles near the strait, highlighting its threats to close the vital passage way as the West readies to impose more economic sanctions over Tehran's nuclear drive.

The United States and its allies have imposed their sanctions to punish Iran for maintaining a nuclear programme they believe masks military objectives, a claim rejected by Tehran.


© 2012 AFP

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