Brent crude oil steadied above $111 on Friday morning after a spike following news of the Algerian hostage situation. The commodity traded at 111.18 on Friday morning.
On Wednesday, Islamist militants raided an Algerian energy field and reportedly captured 41 hostages, including several Westerners. According to the BBC, the Algerian military attempted to free the hostages on Thursday, resulting in an unconfirmed number of deaths and several hostages freed and returned to their home countries. The instability has caused renewed fears about oil supply interruptions and bolstered Brent prices.
The Algerian crisis stoked fears about supply interruption, but continued support came from confidence that the global economy was on the path to recovery. Data showing that China has bounced back from its stalled economy seen early in 2012 gave investors reason to believe that oil demand would match supply in 2013.
Reuters reported that the data showed the nation's industrial output had grown by 10.3 percent in December, which exceeded expectations of 10.1 percent growth. Chinese implied oil demand hit record highs in December, and investors are speculating that the nation will have nearly 8.4 percent GDP growth in 2013.
The US also showed signs of renewed oil demand as its economy proved resilient at the end of 2012 as well. Residential construction increased in December, confirming hopes that the country would start 2013 on strong footing. The number one oil consuming nation also had the lowest number of new unemployment claims in five years for the week ending on January 11th.
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