Investing.com - Crude oil futures rallied to a three-month high on Wednesday, as market sentiment strengthened broadly after U.S. lawmakers approved a highly-anticipated budget bill slated to prevent the country from falling into recession.
Official data showing that manufacturing activity in China expanded for the third consecutive month in December provided further support.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February traded at USD93.69 a barrel during U.S. morning trade, up 2% on the day. Trading was closed January 1 for the New Year holiday.
New York-traded oil prices rose by as much as 2.1% earlier in the session to trade at a daily high of USD93.78 a barrel, the strongest level since September 21.
The U.S. House of Representatives voted Tuesday night in favor of a deal to avert the fiscal cliff, blocking a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.
The final vote tally was 257 to 167. The passage came after the Senate approved the measure by a large majority of 89-8 early Tuesday morning.
The bill, which raises taxes for the wealthy and delays spending cuts for two months, now heads to the White House, where President Barack Obama is expected to sign it into law.
The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil prices found additional support after official data Tuesday showed that China's manufacturing Purchasing Managers' Index expanded for the third consecutive month in December.
The PMI held steady at 50.6 last month, above the 50.0-point mark that indicates an improvement in activity.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand in recent years. Manufacturing numbers are often viewed as indicators for future oil demand growth.
Weakness in the U.S. dollar also aided gains. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.4% to trade at 79.56, close to a two-week low.
Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 1.5% to trade at USD112.75 a barrel, with the spread between the Brent and crude contracts standing at USD19.06 a barrel.
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