LONDON: Brent crude oil steadied near a 2-1/2-month high above $110 a barrel on Thursday, supported by better-than-expected data on China's manufacturing industry and a large draw in U.S. crude oil stocks.
China's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed, suggesting a brighter outlook for demand in the world's No.2 oil consumer.
Brent crude was down just 10 cents $110.45 a barrel by 1100 GMT, just below a 2-1/2 month top of $110.73 reached on Wednesday. U.S. crude also eased 10 cents to $103.97 a barrel. The U.S. contract settled up $1.74 on Wednesday, its biggest one-day gain in six weeks.
Commerzbank senior oil and commodities analyst Carsten Fritsch said oil prices had risen this week on evidence of stronger demand for oil. A variety of supply risks had already been priced into the market, he said.
"Unless there is evidence of further supply disruptions, I don't think crude can rise very much further," Fritsch said.
Oil prices drew support from data showing a plunge in U.S. crude stocks last week as imports slumped to their lowest since 1997 as domestic production rose.
Crude inventories in the world's biggest oil consumer fell 7.2 million barrels last week, the Energy Information Administration (EIA) said, compared with analysts' expectations for an increase of 750,000 barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub fell 225,000 barrels, EIA said.
Conflict in Libya also underpinned oil prices.
Its major western oilfields remain closed 10 days after the government said protesters blocking pipeline flows had agreed to leave, while total oil output edged higher, the National Oil Corp said.
Only the small 30,000 barrels per day (bpd) Wafa oilfield was producing normally in the west, NOC said. Oil output in the OPEC-member was around 230,000 bpd, well below the country's 1.6 million bpd capacity.
Commodities such as oil were supported by minutes of the U.S. Federal Reserve's last meeting that reassured investors that policy makers would continue to support the U.S. economy.
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