Oil Rises on China Factory Data, Brent-WTI Spread at $12.7/bbl 

Crude-oil futures were higher in Asian trading hours Friday after two sets of data showed an expansion in manufacturing activity in China, the world's second-largest oil consumer.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $96.44 a barrel at 0543 GMT, up $0.06 in the Globex electronic session. December Brent crude on London's ICE Futures exchange rose $0.37 to $109.21 a barrel.

China's slowing manufacturing landscape has weighed on oil demand and any uptick in manufacturing activity supports oil prices, particularly Brent.

Both the official purchasing managers' index, an indicator for the performance of large and state-owned companies, and the private HSBC PMI, an indicator for small and medium enterprises, showed an expansion, although some analysts remained skeptical.

The PMI data suggests the recovery momentum might be slightly stronger than what markets had expected and the reading should be positive for market sentiment, BofA Merrill Lynch said in a note.

However, the bank added that "room for further improvement in PMI is limited and would therefore avoid being too bullish."

China's crude-oil imports had jumped in September, helping it touch a new high in oil imports of 73.22 million tons for the third quarter, Xinhua News Agency said in its fortnightly energy report.

It said China's oil demand will peak seasonally in the fourth quarter, but may be weaker than a year earlier. The country's overall economic and oil demand growth are also expected to slow down as the government refocuses on the domestic economy.

The Brent-WTI spread remains wide at around $12.75 a barrel as U.S. oil production continues to rise.

As the U.S. energy transport infrastructure develops WTI should trade more in line with Brent, but WTI will maintain a discount of around $5 against Brent "to justify quality differences and to provide an incentive for U.S. refineries to choose for the higher-quality WTI," analyst Hans van Cleef at ABN Amro said.

He said oil prices will continue to ease in 2014 and 2015 on rising supply and a stronger dollar in the few next years.

Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--rose 98 points to $2.5968 a gallon, while December heating oil traded at $2.9620, 81 points higher.

ICE gasoil for November changed hands at $935.50 a metric ton, up $3.00 from Thursday's settlement.


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