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Crude oil futures rally 1% after upbeat euro zone manufacturing PMIs

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Shutterstock photo - Crude oil futures shook off earlier weakness to turn sharply higher on Monday, as upbeat euro zone manufacturing data helped ease concerns over the region's economic outlook.

On the New York Mercantile Exchange, light sweet crude futures for delivery in August traded at USD97.60 a barrel during U.S. morning trade, up 1.1% on the day.

New York-traded oil prices rose by as much as 1.2% earlier in the session to hit a daily high of USD97.69 a barrel.

Oil's move higher after data showed that Spain's manufacturing purchasing managers' index rose to 50.0 in June, the highest level in two years, up from 48.1 in May.

France's manufacturing PMI improved to 48.4 from 46.4 in May, but Germany's manufacturing PMI fell to 48.6, from May's reading of 49.4.

Investors were now looking ahead to the Institute of Supply Management's report on U.S. manufacturing activity later in the trading day to further gauge the strength of the U.S. economy.

Any improvement in the U.S. economy was likely to reinforce the view that the Federal Reserve will begin to taper its bond purchase program in the coming months.

The Fed's stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

The U.S. is the world's biggest oil consuming country, responsible for almost 22% of global oil demand.

Oil prices were mildly lower earlier in the session as investors digested a pair of disappointing reports on the Chinese manufacturing sector.

China's official manufacturing purchasing managers' index came in at 50.1 in June, in line with expectations, following a reading of 50.8 in May.

Separately, China's HSBC manufacturing PMI fell to a nine-month low of 48.2 in June, down from a preliminary reading of 48.3 and further below the 50.0 level that separates contraction from expansion.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for August delivery rose 0.9% to trade at USD103.11 a barrel, with the spread between the Brent and crude contracts standing at USD5.51 a barrel, the narrowest level since January 2011.

The gap between the contracts has been on the decline in recent weeks, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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

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