Oil prices rise on signs of economic recovery and fears of growing unrest in Middle East

26-Aug-13

Oil prices continued an uptrend in anticipation of improved crude oil demand triggered by recent strong global economic data. Brent North Sea oil for delivery in October inched up to US$110 a barrel in London, while New York's main contract, West Texas Intermediate (WTI) crude for September inched up to US$105.1 per barrel. The week saw positive economic data released from China, the US, the eurozone and the UK. Reports from USA show that the number of Americans seeking unemployment benefits rose last week but the trend in layoffs continued to push lower. In the eurozone, the preliminary composite purchasing managers index of business activity (PMI) hit a 26-month high of 51.7 points for August from 50.5 in July. Anything above 50 indicates expansion, while a reading below 50 points to contraction. In USA, the flash PMI was at 53.9, up from a final July reading of 53.7. China’s PMI reading rose to a four-month high of 50.1, adding to recent figures suggesting a slowdown in the Asian economic giant is coming to an end. The global oil market continues to gain support on fears that the unrest in Egypt could spread across the Middle East and block off supplies. In Egypt, toppled dictator Hosni Mubarak was transferred from prison to house arrest at a military hospital on Thursday, in a move overshadowed by a blistering crackdown against his Islamist successors. Over 1,000 people have been killed in the past week in violence in Egypt. Supply outages in Libya continue to support prices.