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December Brent crude futures, were 91 cents, or 1.04%, higher at
$88.36 a barrel by 1040 GMT ahead of their expiry later on
Tuesday.
The more heavily traded January contract climbed 83 cents, or
0.96%，to $87.18. U.S. West Texas Intermediate crude rose 82
cents, or 1%, to $83.13.
Both Brent contracts traded $1 higher earlier in the day.
Weaker-than-expected manufacturing and non-manufacturing
activity data in China stoked fears of slowing fuel demand from
the world's No. 2 oil consumer.
Its official purchasing managers' index missed a forecast and
dipped back below the 50-point level separating contraction from
expansion.
"The country’s manufacturing sector shrank this month, a sign of
policy failure to shore up the economy," PVM's Tamas Varga said
in a note.
But China's fourth quarter fuel demand is expected to rise 10%
year-on-year, PetroChina president Huang Yongzhang said on
Tuesday.
Upside for the oil market hangs on whether Israel expands its
ground offensive in Gaza, CMC Markets' analyst Leon Li said.
"If this evolves into a full-scale invasion and there is
involvement from Iran, tighter supply worries could resurface."
Israel's Prime Minister Benjamin Netanyahu dismissed calls for a
halt to fighting to ease a humanitarian crisis, as Israeli
forces attacked Hamas in the network of tunnels under the
Palestinian exclave.
The risk of escalating conflict in the Middle East and potential
oil supply disruptions have boosted oil prices by around 3.4%
since the Oct. 6 close, the day before Hamas militants launched
an attack in Israel.
"The Middle East premium will likely put a floor under prices in
the foreseeable future even if there is no tangible effect on
region’s oil output," PVM's Varga added.
Markets were also keeping a close eye on a U.S. central bank
meeting ending on Wednesday, despite a high likelihood it will
keep interest rates steady, according to a poll by CME's
Fedwatch tool.
(Reporting by Robert Harvey, Laura Sanicola and Trixie Yap;
Editing by Kirsten Donovan)
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