Brent crude oil ticked up toward $111 after Chinese officials announced an ambitious growth goal for 2013. The commodity traded at $110.52 at 7:09 GMT on Tuesday morning.
According to Reuters, Chinese premier Wen Jiabao said the country would increase fiscal spending in order to match 2012's economic growth of 7.5 percent. Jiabao's statements on Tuesday helped ease worries that followed a disappointing purchasing managers' survey which suggested China's service and manufacturing sectors could be slowing down.
However, gains from Jiabao's statements were limited as the United States' recent “sequester” cast a shadow of uncertainty over future oil demand.
After Democrats and Republicans were unable to reach an agreement regarding the nation's budget, $85 billion worth of automatic spending cuts kicked in on Friday and dragged Brent prices down. The International Monetary Fund predicted that if the cuts are fully implemented, the US growth rate could lose 0.5 percentage points.
The US sequester coupled with reports that worldwide oil supply is increasing have kept Brent prices low recently. A survey at the beginning of March showed that for the first time in four months, production within the Organization for Petroleum Exporting Countries increased in February.
Looking forward, markets will be focused on US non-farm payroll data for January, which is expected later in the week. The data is expected to be stronger than December's report and will support the nation's recent pledge to improve the labor market.
Also in focus are tensions in the Middle East which have kept a floor under Brent prices. Negotiations over Iran's nuclear program have not resulted in any forward progress, although a new meeting has been confirmed later in March.
Unrest in Syria and Egypt also pose a threat in the long run as violence in both nations is expected to continue.
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