Oil little changed following U.S., China and Euro zone data

Oil prices remained fairly unchanged in early European trading on Friday after West Texas Intermediate snapped three days of declines on Thursday on strong China and Euro zone manufacturing data. U.S. jobless claims rose more than expected but averaged the lowest reading since November 2007, boosting demand prospects in the worlds top consumer.

On the New York Mercantile Exchange, WTI crude for October delivery traded at $104.89 per barrel at 6:29 GMT, down 0.14% on the day. Prices traded higher throughout the Asian session and hit days high at $105.37 per barrel, followed by a plunge to days low of $104.84 during European trading. Light, sweet crude rose 1.38% on Thursday, snapping a three-day falling cycle but extended its weekly decline to 2.6% on Friday.

Meanwhile on the ICE, Brent oil for October delivery traded at $110.07 per barrel at 6:32 GMT, marking a 0.12% advance. Futures ranged between days high and low of $110.46 and $109.92 per barrel respectively. The European benchmark rose 0.15% on Thursday and trimmed its weekly decline to 0.5% following its Friday gains.

Oil prices were supported on Thursday following upbeat economic data from the U.S. to Europe and China. The U.S. Department of Labor reported that the number of people who filed for initial unemployment benefits in the week ended August 17 surged by 13 000 to a seasonally adjusted 336 000, surpassing expectations for a rise to 330 000. However, claims sank to the average of 330 500, the lowest since November 2007, which boosted demand prospects in worlds top consumer.

Meanwhile in China, the Chinese HSBC Manufacturing PMI, prepared by HSBC Holdings Plc and Markit Economics, surged to a four-month high of 50.1, signalling expansion that was based on a rebound in new orders. The figure outperformed analysts’ expectations for a surge to 48.3 from July’s final reading of 47.7, an 11-month low. The indicator added to promising reports for July’s factory output, retail sales and exports, providing positive signs that the world’s second biggest economy is stabilizing. Levels above 50 indicate expansion in the respective sector. Flash figures are released approximately six business days prior to the end of the month. The final reading, as well as the government statistics, will be released on September 1.

In Europe, Frances Advance Manufacturing PMI failed to meet analysts projections for a rise to 50.2 and remained flat at 49.7. However, Germanys manufacturing sector offset Frances downbeat data. The leading EU nations Advance Manufacturing PMI for August surged to 52.0, surpassing expectations for an advance to 51.1 from Julys reading of 50.7. Meanwhile, the Euro zones flash manufacturing PMI also exceeded projections and rose to 51.3, compared to 50.3 in July and an expected increase to 50.7.

In the U.S., apart from the initial jobless claims, the U.S. manufacturing activity expanded to a five-month high as hiring picked up and new orders increased at the fastest pace since January. The Markit Flash U.S. Manufacturing PMI rose to 53.9 in August from Julys 53.7 final reading.

The U.S. Leading Indicators surged by 0.6% in July , 0.1% above expectations, after remaining unchanged in June.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, said for Reuters: “Weve got a much better global demand outlook and thats the medium- to long-term driver for oil prices.”

Meanwhile, concern over supply outages from Libya eased as the countrys Marsa al Brega port is expected to handle oil cargoes in the next few days. However, the African nations biggest export terminal, Es Sider, and the oil port of Zueitina remain closed, Deputy Oil Minister Omar Shakmak said.

At the same time, concern over U.S. output is building with the peak period of the U.S. hurricane season coming. Atlantic hurricanes which hit the Gulf of Mexico often disrupt oil production and shipping. The gulf accounts for nearly a quarter of U.S. oil output.

“The risk for oil is only in the upside. The potential to push prices higher will come from supply,” McCarthy said, referring to the hurricane season.

Market players will also be keeping a close eye on Friday’s New Home Sales in the U.S. to further gauge the economy’s recovery pace. The indicator is expected to have declined to 0.490 million units sold in July, down from 0.497 million in the preceding month.