Published November 09, 2012
Oil futures advanced on Friday as strong U.S. consumer sentiment and positive Chinese economic data overshadowed economic pressures posed by Europe's debt crisis and looming U.S. tax hikes and automatic spending cuts.
Crude futures and equities on Wall Street received a boost from data showing U.S. consumer sentiment rose to its highest level in more than five years.
Separate data showed wholesale inventories rose in September by the most in nine months as wholesalers sharply boosted stocks of farm goods and oil.
Europe's debt problems and the possibility of slower growth from China and India were potential sources of the downside risk.
Sounding a cautious note on oil demand, OPEC left its 2013 demand growth outlook little changed, down a negligible 10,000 barrels per day (bpd), but said the expected growth has a downside risk, especially in the first half of next year.
Analysts saw Brent's push higher as a sign the market was trying to rebound from weeks of ending lower.
"The market is still just hovering above its four-month lows," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. "Maybe the equity market turning around turned it up. But I don't think anything is driving the market higher other than it trying to pick its head up."
Brent and U.S. crude were on track to post weekly gains, snapping a string of three straight weekly declines.
Leading the oil complex early was the U.S. RBOB gasoline futures market. Gasoline, up more than 3 percent, or more than 8 cents a gallon, was buffeted by ongoing supply tightness around New York Harbor as damage from Hurricane Sandy continue to hinder distribution in the region.
Heating oil was also higher on the day, rising nearly 2 percent, or more than 5 cents a gallon.
Brent December crude had risen $2.40 to $109.65 a barrel by 12:30 p.m. EST (1730 GMT), trading from $106.25 to $109.78.
U.S. December crude was up $1.46 at $86.55 a barrel, after dropping to $84.13 during the session.
U.S. 'FISCAL CLIFF'
Investor caution remains over concerns that the world's top oil consumer, the United States, is at risk of tipping into recession if it fails to find a compromise to cut its deficit before nearly $600 billion worth of spending cuts and tax increases kick in early next year.
Those concerns, against a backdrop of debt troubles in the euro zone, have weighed across financial markets and led to oil swinging in about a $7 range this week, its widest since late September.
U.S. President Barack Obama will join the battle over the U.S. "fiscal cliff" on Friday for the first time since voters elected him a second term in office> Obama is scheduled to make a statement at 1:05 p.m. EST (1805 GMT).
In addition, investors are monitoring how the United States will tackle the issue of the debt ceiling, which needs to be raised to avoid a government shutdown.
"For the time being, the uncertainty over the fiscal cliff in the U.S. will prevent any price recovery," analysts at Commerzbank in Frankfurt said in a note.
Across the Atlantic, euro-zone finance ministers meet on Monday in Brussels where the main topic of their discussions will be thawing the freeze on lending to Greece.
Supportive October data from China underpinned prices on Friday, as infrastructure investment accelerated and output from the country's factories ran at its fastest in five months.
China's October exports rose more than 11 percent on a year ago and imports grew by 2.8 percent over the same period, Commerce Minister Chen Deming said.
The data offered evidence that a cyclical recovery gained strength last month after the world's second largest economy suffered the slowest period of growth since early 2009 in the third quarter. (Reporting by Alice Baghdjian in London, Ramya Venugopal in Singapore and Robert Gibbons in New York; Editing by Alden Bentley)