The prospect that a strengthening U.S. economy could persuade the
Federal Reserve to begin bringing the curtain down on its easy money
policies dampened sentiment, however, as there will be less money
available to invest in commodity markets.
Brent crude oil futures edged higher by 11 cents to $111.72 a barrel
by 0430 GMT, after rising more than $1 in the previous session.
U.S. crude oil futures gained 18 cents to $97.83, after ending on
Friday with its largest weekly percentage gain since July 5.
"The U.S. and China are two big growth engines of the world economy,
so any improvements in terms of their economies is going to reflect
well in future crude oil demand," said Ben Le Brun, a market analyst
at OptionsXpress in Sydney.
"But offsetting that is the potential for early tapering coming out
of the U.S. economy. If they spring a surprise in the markets in
December, then I think that will be a negative for oil prices
overall because there's not as much money finding its way into the
commodity market overall, and in turn to risk assests."
U.S. data released on Friday showed the jobless rate fell last month
to its lowest since November 2008, fuelling speculation that the Fed
might act when it holds its next policy meeting on Dec. 17-18.
And China released trade figures on Sunday that showed exports well
above forecasts in November, rising 12.7 percent from a year
earlier, while imports up 5.3 percent added to recent signs that
economic growth is stabilising.
Crude imports by China, the world's second largest consumer, reached
23.56 million tonnes in November, or 5.73 million barrels per day
(bpd), up 19.1 percent from the previous month on a daily basis.
China is due to release its industrial output data on Tuesday.
The focus on the Fed's upcoming meeting is expected to dominate
sentiment for the days ahead.
[to top of second column]
"The market is probably prepared to sit back and wait in view of the
fact that there's been a pretty significant rally over recent days
that tilts the balance against more aggressive buying as we are
already well off the lows," said Ric Spooner, chief market analyst
at CMC Markets.
A decline in U.S. crude inventories after a 10-week increase had
buoyed prices along with Friday's jobs data.
Oil prices were also supported after Transcanada Corp said the
Keystone pipeline would be in service by next month to deliver crude
from U.S. storage hub Cushing, Oklahoma, to refining markets.
Weather-related production outages also supported prices, analysts
North Sea oil producers cut output and moved staff from some
platforms as a major storm blasted toward mainland Europe in what
meteorologists warned could be the worst weather to hit the
continent in years.
Cold weather also dented oil and gas production in the United States
and could further crimp output in top crude-producing states, such
as Texas and North Dakota.
(Editing by Simon Cameron-Moore)
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