Oil prices turned higher on Tuesday after data showing the U.S. manufacturing sector expanded at its fastest pace in 10 months in April eased concerns about slowing economic growth.
The supportive U.S. factory activity data from the Institute of Supply Management (ISM) lifted equities on Wall Street, sending the S&P 500 index up 1 percent, led by energy and financial shares.
Technical buying kicked in when U.S. crude rallied strongly above the 50-day moving average at $105.21 a barrel, after finding formidable resistance at that level in recent sessions.
"The ISM data pushed crude up and strong equities are helping, and when crude moved above the 50-day moving average that triggered some technical buying," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
Earlier data showing China's official purchasing managers' index (PMI) rose to a 13-month high in April, although slightly below expectations, had helped limit losses related to concerns about sputtering economic growth in the euro zone and the United States.
Brent June crude rose 26 cents to $119.73 a barrel by 1:13 p.m. EDT (1713 GMT), having traded from $118.80 to $120.02. U.S. June crude gained $1.33 to $106.20, having recovered from a $104.39 intraday low to reach $106.43.
The jump in U.S. oil prices narrowed the Brent/U.S. crude spread and pushed Brent's premium below $14 a barrel.
The possibility of another Midwest-to-Gulf Coast pipeline reversal to alleviate a glut in Midwest crude supplies may have helped spark U.S. oil's stronger rise and the narrowed Brent/U.S. spread, brokers and traders said.
Marathon Petroleum Corp said it is considering all options for the Capline crude oil pipeline running from Louisiana to the U.S. Midwest in which it has a 30 percent interest.
Last month's news that Enterprise Product Partners and Enbridge plan to reverse the flow of the Seaway oil pipeline by mid-May, two weeks ahead of schedule, helped sharply reduce Brent's premium to its U.S. counterpart.
Brent posted a 2.8 percent monthly loss in April, while U.S. front-month crude rose 1.8 percent, up a third straight month.
The ISM said its index of U.S. factory activity rose to 54.8 in April, contrary to expectations for a decline to 53.0, and besting the top end of forecasts, according to a Reuters poll.
Readings above 50 signal expansion while those below 50 point to contraction.
China's official PMI reached 53.3 in April, up from 53.1 in March, indicating a further expansion in the factory sector.
But that boost fell short of expectations for a 53.6 reading and the National Bureau of Statistics noted many industries remained weak, with readings below 50, among them chemicals, equipment, autos and oil refining.
U.S. crude oil stocks are expected to have risen last week for a sixth consecutive build, a Reuters survey of analysts showed ahead of weekly inventory reports.
Data from the industry group American Petroleum Institute is due at 4:30 p.m. EDT on Tuesday.
OPEC production in April hit its highest level since 2008, a Reuters survey found on Monday. Increased output from Iraq, Saudi Arabia and Libya more than compensated for the lowest Iranian supply in two decades ahead of a European Union embargo on Tehran's oil set for July, the survey said.
Worries that Iran's dispute with the West over Tehran's nuclear program might ignite a regional conflict and widespread supply disruption helped push crude prices sharply higher in the first quarter.
But revived talks between Iran and major powers in April and another round of negotiations set for late May have allowed some deflation of the geopolitical fear premium, even as investors and analysts remain cautious about diplomacy's prospects. (Additional reporting by Gene Ramos in New York, Peg Mackey and Zaida Espana in London and Florence Tan in Singapore; Editing by Dale Hudson)