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Brent crude oil rose by 1.5 percent on Monday, lifted by expectations for rising demand that sprang from stronger European economic data, while supplies from Libya remained sharply curtailed. Brent rose by nearly $2 per barrel, boosting its premium to US oil to a one-week high.
German manufacturing data fed expectations for increasing oil demand, while supplies remained tight as Libya failed to reach a deal with tribal leaders to end a blockade of several oil-exporting ports. The closure of the Libyan oil ports is preventing export of several hundred thousand barrels per day (bpd) of high-quality light crude.
Strong US manufacturing output also supported prices. Brent futures for January settled $1.64 higher at $110.47 after rising to a high of $110.80. The contract breached the 10- and 15-day moving averages of $110.35 and $110.51 for the first time in five sessions.
US crude oil futures ended the day 88 cents higher at $97.48 per barrel. Brent's premium to US oil rose as high as $13.72 during the session and settled 76 cents higher at $12.99. The spread dropped below the 10-day moving average for the first time in two weeks. Rising Brent prices drove US ultra low-sulfur diesel (ULSD) futures and London gas oil futures to near one-week highs. ULSD settled 1.45 cents higher at $2.9902 per gallon, after touching a high of $3.0376. Gas oil rose by $13.75 to settle at $931.50 a ton, after reaching $937.75.
German manufacturing data showed an expansion in the private sector of Europe's largest economy. "What really moved the market was the German manufacturing numbers," said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago. "The concept for traders here is a bit of a 'risk-on' trade."
Tight supplies from Libya are "definitely going to be weighing on the market," Ilczyszyn added. Libyan port blockages, along with strikes by oil workers, civil servants, and protests by tribesmen and others at oilfields across the desert country, have slashed its oil exports to around 110,000 bpd from more than 1 million in July.
The US Energy Information Administration (EIA) said oil output in the world's largest oil consumer will increase by 800,000 bpd every year until 2016, when it will total 9.5 million bpd, just below a 1970 record of 9.6 million bpd. "The market's been anticipating that and that's why we have a ($12) premium in Brent over WTI," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Investors also awaited a US Federal Reserve decision on how soon to end monetary stimulus when it meets on Tuesday and Wednesday to discuss policy. The US central bank has been buying $85 billion worth of bonds a month to free up cash reserves at banks and stimulate lending. The market also looked to the release of data showing the amount of oil in storage. US crude oil inventories fell by 3.6 million barrels last week due to declining imports, while gasoline and distillate inventories rose, a preliminary Reuters poll showed on Monday.
Brent crude oil rose by 1.5 percent on Monday, lifted by expectations for rising demand that sprang from stronger European economic data, while supplies from Libya remained sharply curtailed. Brent rose by nearly $2 per barrel, boosting its premium to US oil to a one-week high.
German manufacturing data fed expectations for increasing oil demand, while supplies remained tight as Libya failed to reach a deal with tribal leaders to end a blockade of several oil-exporting ports. The closure of the Libyan oil ports is preventing export of several hundred thousand barrels per day (bpd) of high-quality light crude.
Strong US manufacturing output also supported prices. Brent futures for January settled $1.64 higher at $110.47 after rising to a high of $110.80. The contract breached the 10- and 15-day moving averages of $110.35 and $110.51 for the first time in five sessions.
US crude oil futures ended the day 88 cents higher at $97.48 per barrel. Brent's premium to US oil rose as high as $13.72 during the session and settled 76 cents higher at $12.99. The spread dropped below the 10-day moving average for the first time in two weeks. Rising Brent prices drove US ultra low-sulfur diesel (ULSD) futures and London gas oil futures to near one-week highs. ULSD settled 1.45 cents higher at $2.9902 per gallon, after touching a high of $3.0376. Gas oil rose by $13.75 to settle at $931.50 a ton, after reaching $937.75.
German manufacturing data showed an expansion in the private sector of Europe's largest economy. "What really moved the market was the German manufacturing numbers," said Rich Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago. "The concept for traders here is a bit of a 'risk-on' trade."
Tight supplies from Libya are "definitely going to be weighing on the market," Ilczyszyn added. Libyan port blockages, along with strikes by oil workers, civil servants, and protests by tribesmen and others at oilfields across the desert country, have slashed its oil exports to around 110,000 bpd from more than 1 million in July.
The US Energy Information Administration (EIA) said oil output in the world's largest oil consumer will increase by 800,000 bpd every year until 2016, when it will total 9.5 million bpd, just below a 1970 record of 9.6 million bpd. "The market's been anticipating that and that's why we have a ($12) premium in Brent over WTI," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Investors also awaited a US Federal Reserve decision on how soon to end monetary stimulus when it meets on Tuesday and Wednesday to discuss policy. The US central bank has been buying $85 billion worth of bonds a month to free up cash reserves at banks and stimulate lending. The market also looked to the release of data showing the amount of oil in storage. US crude oil inventories fell by 3.6 million barrels last week due to declining imports, while gasoline and distillate inventories rose, a preliminary Reuters poll showed on Monday.
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