Crude oil prices advanced in Asia Thursday after a private survey showed that Chinese factory activity in January grew at its fastest pace in two years.
Light sweet crude for March delivery gained 0.26 percent or 23 cents to $95.48 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours. Brent crude oil futures for the March delivery declined 0.03 percent or 3 cents to $112.77 a barrel on the ICE futures exchange in London.
The HSBC Flash Purchasing Managers Index (PMI), a measure of the nation-wide manufacturing, gained to 51.9 in January from December’s final reading of 51.5, suggesting a revival in the economic growth momentum in the world's second-largest oil consuming nation.
The manufacturing data along with the recent better-than-expected economic reports suggest that China’s economy will do better in the first quarter and raised expectation of a hike in fuel demand. The official data released by the National Bureau of Statistics last week showed that Chinese economy expanded at 7.9 percent on an annual basis in the October-December quarter, up from 7.4 percent growth reported in the third quarter and also topped the analysts’ expectation of 7.8 percent.
"We're expecting second quarter to be better than the first in terms of GDP growth in China. Given that the data was better than expected, the markets could move higher in the rest of the day," ANZ commodities analyst Natalie Rampono told Reuters.
Oil prices plunged Wednesday on news of an operating snag on the key Seaway Pipeline. Seaway Pipeline, which carries oil from the WTI delivery point in Cushing to the key Gulf Coast refining region, has cut its crude flow by more than half to 175,000 barrels per day.
Meanwhile, an inventory report late Wednesday showed a bigger-than-expected rise in the U.S. crude stockpiles last week. The American Petroleum Institute said crude inventories had increased by 3.2 million barrels in the week ending Jan.18, higher than the analysts’ estimate of a 1.8 million barrel rise.
On Wednesday, light sweet crude for the March delivery plunged 1.5 percent or $1.45 and settled at $95.23 a barrel on the New York Mercantile Exchange while Brent crude for the March delivery rose 38 cents to $112.80 a barrel.
After the markets open Thursday, the U.S. Energy Information Administration (EIA) is due to report the weekly inventory data that are expected to show that the stockpiles increased by 1.75 million barrels last week.