NEW YORK: Brent crude oil started the third quarter up nearly $1 a barrel on Monday amid a broad commodities rally due to a bullish US equity market, encouraging data from Europe and concerns over political turmoil in Egypt.
US stock indexes rose 1 percent on Monday, building on the strongest first half of any year since 1998 as concerns continued to ease that the Federal Reserve would soon tighten its stimulus program.
A key survey of euro zone manufacturing suggested the bloc's economy had stabilized and would probably grow this quarter, raising hopes of a revival in European oil demand.
The more upbeat European survey balanced PMIs from China and India showing signs of cooling economic growth. China's official PMI report was better than expected.
"Almost the entire commodities sector is up today on the manufacturing figures," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
"There is a perceptible sense of relief that the Chinese PMI did not slide below the 50-mark as some people had feared."
Brent crude for August dropped as low as $101.63 per barrel after the Chinese factory data, but then recovered to trade up 75 cents at $102.91 by 11:52 a.m. EDT (1552 GMT)
US crude was up $1.11 to $97.67 a barrel.
Brent's premium to US crude narrowed to $5.24 per barrel, its lowest level since January 2011, from its 2013 high of over $23 in February,
"There's a global economic malaise holding down Brent, and peak refinery turnaround season in the US so there's a strong demand for oil here," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania.
Front-month Brent shed more than 7 percent in the second quarter ended June, its third straight quarterly decline and the longest such stretch of losses in 15 years.
BP Plc said it completed the commissioning and startup of a new 250,000 barrel per day (bpd) crude distillation unit at its 413,000 bpd Whiting, Indiana, refinery.
Egypt's powerful armed forces gave Islamist President Mohamed Mursi a virtual ultimatum on Monday to share power, after millions of Egyptian citizens took to the streets on Sunday to demand his resignation.
"I think traders do remember that the Egyptian protests [of 2011] did lead to a supply issue out of Libya," said Andy Lebow, vice president at Jefferies Bache in New York.
Markets were watching the US Federal Reserve nervously for indications on the future of its bond-buying program, which analysts say has helped support commodities.
A top Fed official signalled the US central bank may move to roll back its bond purchases in its September meeting, a move that could strengthen the dollar. But the timing will also depend on the US labour market, and investors are waiting for more clues from a job report on Friday.
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