(Reuters) - Oil prices turned higher on Tuesday after data
showing the U.S. manufacturing sector expanded at its fastest pace
in 10 months in April eased concerns about slowing economic
The supportive U.S. factory data from the Institute of Supply
) lifted equities on Wall Street, sending the S&P 500 index up
1 percent and the
to its highest level since December 2007. .N
Technical buying kicked in when
rose past the 50-day moving average at $105.21 a barrel, after
finding formidable resistance at that level in recent sessions.
"The ISM data pushed crude up and strong equities are helping,
and when crude moved above the 50-day moving average that triggered
some technical buying," said Gene McGillian, analyst at Tradition
Energy in Stamford, Connecticut.
Earlier data showing China's official purchasing managers' index
(PMI) rose to a 13-month high in April helped limit losses related
to worries about sputtering economic growth in the
and the United States.
Brent June crude rose 19 cents to $119.66 a barrel by 2:47 p.m.
EDT (1847 GMT), having traded from $118.80 to $120.02. U.S. June
crude gained $1.29 to settle at $106.16, recovering from a $104.39
low to reach $106.43.
Total U.S. crude trading volume outpaced Brent's and neared its
30-day average, but a holiday that shut markets in much of Europe
and Asia helped limit volumes.
U.S. RBOB gasoline
fell more than 2 cents, with the June contract in the front-month
spot after the expiration of the May contract on Monday. Heating
oil closed less than a penny higher.
Despite pump prices falling 6 cents, U.S. gasoline demand fell
last week versus the previous week and was 5.6 percent compared to
year ago, MasterCard said in a report.
BRENT/U.S. CRUDE SPREAD NARROWS
The Brent/U.S. crude spread narrowed, pushing Brent's premium
below $14 a barrel.
The possibility of another pipeline reversal to alleviate a glut
in Midwest crude supplies may have helped cause the narrowed
Brent/U.S. spread, brokers and traders said.
Marathon Petroleum Corp (
) said it is considering all options for the Capline crude oil
pipeline running from Louisiana to the U.S. Midwest in which it has
a 30 percent interest.
Last month's news that Enterprise Product Partners (
) and Enbridge (
) plan to reverse the flow of the Seaway oil pipeline by mid-May,
two weeks ahead of schedule, helped sharply reduce Brent's premium
to its U.S. counterpart.
EXPANDING FACTORY SECTORS
The ISM said its U.S. factory activity index rose to 54.8 in
April, contrary to expectations for a decline.
Readings above 50 signal expansion while those below 50 point to
ISM's gauge of employment rose to its highest since last June
and the strong labor figure comes ahead of the government's more
comprehensive monthly jobs report due on Friday, which is forecast
to show the economy added 170,000 jobs in April, including 22,000
China's official PMI reached 53.3 in April, up from 53.1 in
But that boost fell short of expectations for a 53.6 reading and
the National Bureau of Statistics noted many industries remained
weak, among the chemicals, autos and oil refining.
OIL SUPPLY PICTURE
U.S. crude oil stocks are expected to have risen last week for a
sixth consecutive build, a Reuters survey of analysts showed ahead
of weekly inventory reports.
Data from the industry group American Petroleum Institute is due
at 4:30 p.m. EDT on Tuesday.
OPEC production in April hit its highest level since 2008, a
Reuters survey found on Monday. Increased output from Iraq,
and Libya more than compensated for the lowest Iranian supply in
two decades ahead of a European Union embargo on Tehran's oil set
for July, the survey said.
Worries that Iran's dispute with the West over Tehran's nuclear
program might ignite a regional conflict and widespread supply
disruption helped boost oil prices in the first quarter.
But revived talks between
and major powers in April and another round of negotiations set for
late May have allowed some deflation of the geopolitical fear
premium, even as investors and analysts remain cautious about
(Additional reporting by
in New York, Peg Mackey and
in London and Florence Tan in Singapore; Editing by
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