Oil Bounces as China Data Eases Economy Worry

Oil rose on Wednesday, snapping a six-day losing streak, after economic data from China suggested a gradual recovery in the world's No. 2 oil consumer, though weak European data kept the gain slim.
 
China's economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers signalled, with new orders and output at their highest in months.
 
However in Europe, the economic outlook remained grim with businesses across the euro zone suffering their worst month since October, according to PMI data, while German business sentiment dropped for the sixth successive month in October.
 
Brent crude was up 40 cents at $108.65 a barrel by 1020 GMT.

It had fallen in each of the six previous trading sessions, the longest losing streak in more than two years.
 
US oil rose 16 cents to $86.83.
 
"The Chinese data has given the market a bit of a boost and prompted some short covering, the demand picture is looking less bad than it was," said Jack Pollard, research analyst at Sucden Financial.
 
Brent oil hit an intraday low of $107.31 on Tuesday, the weakest since Sept. 20 and below its 100-day moving average at $107.42.
 
The US contract slumped by more than 3 percent to touch a session-low of $85.69, the lowest since July 13.
 
Oil prices have been under pressure because of a weak demand outlook from the world's top two oil consumers.
 
Investors were awaiting inventory numbers from the Energy Information Administration (EIA) due later in the day to gauge the demand outlook for the United States.
 
Crude inventories are seen 1.9 million barrels higher for the week ended Oct. 19. All 13 analysts forecast a build in crude stockpiles.
 
Crude oil inventories as measured by the API increased by 313,000 barrels in the week to Oct. 19, compared with an analyst forecast for an increase of 1.9 million barrels.
 
SUPPLY FEARS
 
Lower supply from Nigeria, Africa's top oil producer, has provided some support to prices, particularly Brent crude, which outperformed US crude.
 
Nigeria's oil production fell to around 2.1-2.2 million barrels per day (bpd) last week, down from an average of 2.5 million bpd this year, the state-oil company said, following flooding and a major outage on a Shell facility.
 
Output is now back to normal, an oil industry regulator told Reuters on Wednesday.
 
"This could certainly be producing a little bit of buying interest in the spreads and therefore forcing backwardation a little wider," said Tony Machacek, a broker at Jefferies Bache in London.
 
Backwardation refers to a market structure where prices are higher for prompt delivery than for later dates.
 
Fears of possible supply disruptions due to unrest in the Middle East have also lent some support.
 
Iran's oil minister Rostam Qasemi said on Tuesday his country would stop oil exports if pressure from Western sanctions got any tighter and that it had a "Plan B" contingency strategy to survive without oil revenues.
 
Western nations led by the United States have imposed tough sanctions on Iran this year in an attempt to curb its nuclear programme that they say is designed to produce atomic weapons. Tehran says its nuclear plans are peaceful.
 
Qasemi's statement is the latest in a series of threats of retaliation by Tehran in response to the sanctions, which have heightened political tensions across the Middle East and, analysts say, led to a sharp drop in Iranian oil exports.