Submitted by Fox First at Ten on December 14th
By By PABLO GORONDIAssociated Press
The price of oil rose to near $87 a barrel Friday, boosted by a survey that showed the recovery in China's manufacturing is gathering strength.
By early afternoon in Europe, benchmark crude for January delivery was up 83 cents to $86.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 88 cents to end at $85.89 per barrel in New York on Thursday.
HSBC Corp. said the preliminary version of its monthly Purchasing Managers' Index rose to 50.9 in December from 50.5 in November. Numbers above 50 represent expanding activity.
The improvement in factory output was a sign that energy consumption might be on the upswing in the world's No. 2 economy. Greater demand from China if sustained could push oil prices higher.
"China finally appears to have bottomed out and we expect it to recover moderately in the coming quarters, supported by stronger domestic demand and some improvements in exports," said analysts at Danske Bank in Copenhagen.
Markets are also awaiting U.S. industrial production data due later Friday from the Federal Reserve.
On Thursday, prices fell Thursday over concerns that President Barack Obama and Republican leaders were far from reaching a deal to reduce the budget deficit before the end of the year. Without an agreement, significant tax increases and government spending cuts will automatically take effect - posing the threat of recession.
"It seems that concerns about the impact of a possible U.S. fiscal crisis continue to limit gains in crude oil prices, despite the robust Chinese economic data and the weaker U.S. dollar," said a report from Sucden Financial Research in London.
A weaker U.S. currency makes crude cheaper - and a more attractive investment - for traders using other currencies. On Friday, the euro was up to $1.3092 from $1.3075 on Thursday.
Brent crude, used to set prices for international varieties of oil, rose 80 cents to $108.66 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
- Heating oil rose 2.89 cents to $2.9726 a gallon.
- Natural gas lost 4.1 cents to $3.306 per 1,000 cubic feet.
- Wholesale gasoline added 2.85 cents to $2.6306 a gallon.
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Pamela Sampson in Bangkok contributed to this report.
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