Brent crude oil edged toward $112 per barrel on Monday morning, trading at $111.47 at 7:24 GMT. The gains were attributed to new data from China showing that the second largest oil consumer's economy was on the road to recovery.
PMI data showed that China's manufacturing sector was picking up the pace, after activity levels rose in November for the first time in 13 months. This news buoyed Brent prices after concerns that large economies like China and the US would slow in 2013 and decrease consumption.
The PMI data confirmed analysts' predictions that the Chinese economy will recover and GDP growth will rebound in the fourth quarter. Later in December, more positive news is expected from China's trade data and industrial output.
The US still weighs heavy on Brent prices as it moves closer to its January 1st fiscal cliff. Democrats and Republicans within the US government have yet to agree on an acceptable alternative to managing the country's deficit, which has caused uncertainty over whether the number one oil consumer will find a solution and avoid the 600 billion dollar bundle of tax increases and spending cuts.
Tension in the Middle East continued to support Brent prices as ongoing violence in Syria and Egypt and tension between Israel and Palestinians stoked fears that the instability in the region will eventually result in supply interruptions.
According to Reuters, the US Senate slapped more sanctions on Iran's energy and shipping sectors in an effort to cut funding to their nuclear development program. Iran has continued with uranium enrichment work against the wishes of the West, claiming the program is intended as a source of energy.
Already, the country faces heavy sanctions on its oil exports, but so far has not been deterred from advancing the program.
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