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 China's factory sector has expanded slightly this month, according
to the flash HSBC/Markit Purchasing Managers' Index. The index
reached a four-month high of 50.1 in February, just above the 50
level that separates growth in activity from contraction. A Reuters
poll had forecast a reading of 49.5.
China is the world's biggest energy consumer and second largest user
of oil behind the United States, and even small changes in Chinese
demand can move oil prices.
The market also got a small lift from comment by Saudi oil minister
Ali al-Naimi, who spoke to reporters in the port city of Jizan,
southwest Saudi Arabia.
"Markets are calm now ... demand is growing," said Naimi, who was
behind a change in the strategy of the Organization of the Petroleum
Exporting Countries last year, when it decided not to adjust
production despite a sharp fall in oil prices.
Oil prices collapsed by 60 percent between June and January to
almost $45 a barrel, but have since recovered some ground.
Brent was up 40 cents at $59.06 a barrel by 1200 GMT, while U.S.
crude futures were up by 30 cents at $49.58 a barrel.
Simon Wardell, oil analyst at Global Insight, said Naimi's comments
reflected a desire for stability in the market.
"They want to find out where the floor price is. I think they are
indicating that we are not that far off the floor in the current
price," he said.
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Yusuke Seta, commodity sales manager at Newedge Japan, said the
China data was also a plus for oil.
"That's good news (as it means) potential oil demand, but I think
the market needs to see more stable and concrete demand from China,"
he said.
Oil fell on Tuesday after a bigger-than-anticipated rise in U.S.
crude oil stocks, which have risen steadily over the last few months
as domestic production has outstripped demand.
U.S. crude inventories rose by 8.9 million barrels last week as
refineries cut output.
(Additional reporting by Jane Xie in Singapore; Editing by Dale
Hudson and Christopher Johnson)
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