The price of oil rose above $86 a barrel Friday, Dec 14, boosted by a survey that showed the recovery in China’s manufacturing is gathering strength, The Associated Press reports.
Benchmark crude for January delivery was up 65 cents to $86.54 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract lost 88 cents to end at $85.89 per barrel in New York on Thursday.
HSBC Corp. said the preliminary version of its monthly Purchasing Managers’ Index rose to 50.9 on a 100-point scale on which numbers above 50 represent expanding activity. That was up from November’s 50.5. The full report is due out at the end of the month.
The improvement in factory output was a sign that energy consumption might be on the upswing in the world’s No. 2 economy. Greater demand from China if sustained could push oil prices higher.
“A lot of news has been generally building up the picture that China is not going to have a hard landing,” said Andrew Sullivan, a market analyst in Hong Kong. “I think a lot of the pricing of crude is related to what people expect to be happening going forward as far as consumption is concerned.”
Prices fell Thursday over concerns that President Barack Obama and Republican leaders were far from reaching a deal to reduce the budget deficit before the end of the year. Without an agreement, significant tax increases and government spending cuts will automatically take effect — posing the threat of recession.
Brent crude, used to price international varieties of oil, rose 44 cents to $106.90 a barrel on the ICE Futures exchange in London.