Reuters/New York
Oil rose to $79 a barrel yesterday after data showed US factory orders in September expanded at a quicker pace than expected, signalling potential for more fuel demand in the world’s biggest energy consumer.
Factory orders expanded 0.9% in September, surpassing Wall Street analyst expectations, and factory inventories fell.
“Factory orders are a positive sign. This helps the broad sentiment that an economic recovery will eventually boost fuel demand and send prices higher,” said Gene McGillian of Tradition Energy in Stamford, Connecticut.
The positive US economic data helped reverse an earlier 2% price decline in oil prices yesterday, when investors shunned riskier assets including oil. Crude prices had fallen as the US dollar firmed to a one-month high against other currencies and equities fell after disappointing earnings from Swiss banking giant UBS.
US crude for December rose $1.07 per barrel to $79.20 by 1750 GMT. London Brent crude futures rose $1.15 to $77.70 a barrel.
Traders were also awaiting weekly US oil inventory data. Analysts expect the data to show crude inventories rose by 1.5mn barrels last week, although inventories of distillates like heating oil and diesel fuel were expected to fall.
Analysts said a recovery in industrial activity may help justify higher oil prices.