SINGAPORE: Oil prices edged higher in Asian trade on Tuesday on easing concerns about a sharp economic slowdown in China, the world's biggest energy user, analysts said.
However, economic and political uncertainty in Europe capped prices and a weaker euro was helping dampen demand for dollar-priced crude.
New York's main contract, West Texas Intermediate crude for delivery in June was up six cents to $103.17 per barrel while Brent North Sea crude for June gained 14 cents to $118.85 in morning trade.
Oil prices had slipped on Monday following an HSBC purchasing managers' index showing China's manufacturing activity contracted for a sixth straight month in April.
Analysts, however, said there was a silver lining in the data that indicated recovering demand in the world's second largest economy.
The PMI reading was 49.1 in April, up from 48.3 in March, denoting an improvement but no return to expansion just yet. A reading below 50 indicates contraction while anything above 50 shows growth.
"The Chinese PMI data is a case of whether you look at the glass as half-full or half empty," said Victor Shum, senior principal at Purvin and Gertz international energy consultants in Singapore.
"Some traders and investors are seeing this as a buy opportunity. There is optimism about the Chinese economy because the HSBC PMI actually showed improvement in output, and that has pushed oil prices up."
Political and economic uncertainty in Europe remained a bearish factor, analysts said.
Spain one of the eurozone's beleaguered economies said Monday that it had plunged back into recession in the first quarter of 2012.
Investors were also spooked by the collapse of the Dutch government, a day after French President Nicolas Sarkozy lost a first-round presidential vote to Socialist Francois Hollande.
"Those optimists who thought the eurozone would bounce back quickly from such a severe crisis which has brought with it deep budget cuts, mass unemployment and civil unrest are experiencing a major reality check," said Justin Harper, market strategist at IG Markets Singapore.
Copyright AFP (Agence France-Presse), 2012
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