Oil back above $80 on strong China, U.S. data


Oil rose back above $80 on Friday to a fresh seven-week high after stronger-than-expected U.S. and Chinese economic data raised hopes of demand recovery in the world's largest consumers.

China's manufacturing sector gathered momentum last month, the official purchasing managers index ( PMI ) number showed, providing further evidence that the economy is pulling smoothly out of a second-quarter swoon.

U.S. crude for November rose 63 cents to $80.60 a barrel at 0654 GMT (2:54 a.m. EDT), adding to an 11.2 percent gain in September, the largest monthly jump since May 2009.

ICE Brent for November was up 66 cents at $82.97 a barrel, the highest in more than eight weeks.

"The China PMI data shows that the manufacturing sector is accelerating and will result in stronger oil demand," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

"This has boosted sentiment and kept oil prices supported."

China's financial markets are closed for a week from October 1 to 7 for the National Day holiday.

In the United States, data on Thursday showed new jobless claims fell last week, regional manufacturing grew faster than expected and consumer spending was stronger than expected.

"All eyes will be on the Institute for Supply Management ( ISM ) report on U.S. manufacturing," Peter Beutel, president of U.S. trading advisory Cameron Hanover, said in a note.

"Any return to stronger numbers - or a better-than-expected set of figures - would bring in more buying, we would expect."

Economists in a Reuters survey expect a reading of 54.5 versus 56.3 in August.

The positive economic data has kept the U.S. dollar steady on Friday after dropping to an eight-month low against a basket of currencies the previous day.

"The dollar could well rally further, downplaying the extent of QE (quantitative easing) needed and push down U.S. treasury yields," said Informa's Kwek.

A stronger dollar makes oil less affordable to holders of other currencies.

The market is also watching Ecuador, an OPEC member country which typically exports around 300,000 barrels per day of crude, after Thursday's military and police protests thrust the country into political unrest.

Ecuador's state oil company Petroecuador said on Thursday its operations had not been affected by political unrest and that the army was reinforcing security at its oil fields.

(Editing by Ed Lane)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Commodities

Referenced Stocks: ISM , PMI

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