Oil prices edge higher on upbeat U.S. and EU data

Oil extended gains on Monday as generally positive data from the EU and U.S. boosted demand outlook. Meanwhile, Chinas PMI readings were lower than May, but overall met projections.

On the New York Mercantile Exchange, WTI crude for August delivery traded at $97.98 per barrel at 14:49 GMT, up 1.47% on the day. Prices ranged between days low at $96.08 that was hit during the Asian session and $98.15, which was touched minutes after the ISM Manufacturing index was published.

Meanwhile, Brent futures for August delivery surged above $103 a barrel, marking a 1.25% daily gain at 14:49 GMT. The European benchmark traded at $103.44 and ranged between days high and low of $103.68 and $101.66 respectively.

Oil prices were supported today as overall positive PMI readings for the leading European nations boosted demand outlook. Spains Manufacturing PMI rose to 50.0, compared to Mays 48.1 reading and surpassing expectations of 48.9. This was the highest level since two years. Germanys Final Manufacturing PMI failed to meet projections of 48.7 and stood at 48.6. However, France managed to outperform expectations of 48.3 and the countrys Final Manufacturing PMI rose to 48.4. Italy also surprised with a rise to 49.1, well above the 47.6 forecast and last months 47.3 reading. The Euro zones general Final Manufacturing PMI surpassed expectations of 48.7, which was also last months reading, and stood at 48.8.

Meanwhile, Great Britains Manufacturing CIPS also outperformed expectations of 51.0 and rose to 52.5, compared to last months 51.5 revised reading. In the U.S., the ISM Manufacturing index marked a serious improvement, rising to 50.9. This was well above Mays 49.0 value and forecasts of an increase to 50.5. Although any positive economic news from the U.S. raises concern about an earlier deceleration of Feds Quantitative Easing, which would push commodities down, increased activity in the industrial sectors of the biggest oil consumers boosts oil demand outlook, which pushed prices up.

China had its own batch of data released during the day, which however was not so positive, but generally met projections. According to the National Bureau of Statistics and China Federation of Logistics and Purchasing, China’s PMI fell to 50.1 last month, below May’s 50.8 figure, but above expectations of 50.0, which is the neutral level of the scale. Values above 50 indicate economic expansion and below 50 – contraction.

According to a separate private index prepared by HSBC and Markit Economics, operating conditions in China’s manufacturing sector worsened during June for a second month in a row. The Asian country’s HSBC PMI stood at 48.2 in June, down from May’s 49.2 reading and below projections of 48.3, straying further from the neutral level.

Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt said for Reuters: “Almost the entire commodities sector is up today on the manufacturing figures. There is a perceptible sense of relief that the Chinese PMI did not slide below the 50-mark as some people had feared.”

Oil drew further support amid concern that mass protests in Egypt against President Mohamed Mursi might spread and affect oil supply. This comes after at least eight people were killed near the headquarters of Mursis Muslim Brotherhood in Cairo. Meanwhile, the civil war in Syria is still raising concern over the conflict spreading to neighborhood oil producing countries, which could falter a big part of global oil supply.

Investors will be looking into this week’s key U.S. data that will show if the economy’s recovery keeps in line with Fed’s projections. The ISM Non – Manufacturing Composite index is due on Wednesday, coupled with the Trade Account, which is expected to show a 40 billion deficit. Factory Orders will be published on Tuesday. On Wednesday, the ADP Employment Change and Initial Jobless Claims will give a preliminary insight into the U.S. labor market’s state, prior to Friday’s most important Change in Non-Farm Payrolls and Unemployment Rate indicators.