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Oil moves above $113 a barrel

US crude on track for seventh consecutive week of gains

Gulf News

London: Oil held above $113 a barrel on Friday as robust economic data from the United States, China and Germany lifted the outlook for global fuel demand.

The overall positive global economic data has boosted investor appetite for riskier assets, buoying some commodities and global equities.

Manufacturing in China and the US grew this month at the quickest pace in about two years and Germany’s business climate index, published on Friday by the Munich-based Ifo think tank, showed morale rising to its highest in more than half a year, adding to evidence that Europe’s largest economy is gathering speed.

Brent crude rose 4 cents to $113.32 (Dh416.24) a barrel by 1005 GMT, while US crude rose 37 cents to $96.32.

“The moves in the oil prices have in recent days been slow as a result of low volatility, but we still have an upward trend since December,” said Harry Tchilinguirian, an analyst at BNP Paribas. “If you put the pieces of the macro data together you see that the environment is improving for oil and that the risks for the global economy posed by the US fiscal cliff and the Eurozone’s slow economic recovery are receding.”

Employment in the US also improved, with the number of new claims for jobless benefits dropping to a five-year low last week.

Investors are also closely watching the Seaway oil pipeline, after its operator reduced on Wednesday the oil flow rate to the US Gulf Coast from Cushing by more than half, to 175,000 barrels per day (bpd).

The 400,000 bpd pipeline is a critical link that is intended to ease the glut at the WTI contract’s delivery point in Cushing, Oklahoma.

Despite the volume cut, front-month US crude prices are on track for a seventh consecutive week of gains. Trading sources have said the pipeline could be back to full capacity soon.

Its operator Enterprise Products Partners has no timetable for restoring full flows through the pipeline, a company spokesman said.

“Refinery turnarounds, rising production of Canadian oil sands and Bakken shale will compete to keep pipelines congested in the first quarter,” said Stephen Schork, editor of The Schork Report, an energy research letter.