SINGAPORE: Brent crude steadied near a 2-1/2 month high above $110 a barrel on Thursday, supported by a large draw in US crude stocks and signs of improvement in China's manufacturing growth.
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.
"This is positive for oil markets, because better-than-expected factory orders will increase demand for oil.
And coupled with commentary from the Fed overnight, oil prices will be supported for the time being," said Ben Le Brun, market analyst with OptionsXpress in Sydney. Brent crude fell 10 cents to $110.45 a barrel by 0659 GMT, just off a 2-1/2 month top of $110.73 reached in the previous session.
US crude eased 20 cents to $103.87 a barrel. The contract settled up $1.74 on Wednesday, its biggest one-day gain in six weeks. Risky assets such as commodities were supported by minutes of the US Federal Reserve's last meeting that reassured investors that policy makers will continue to support the economy.
Investors are now eyeing manufacturing numbers on Thursday from France, Germany and the euro zone, as well as US weekly jobless claims for trading cues.
"If European (PMI) flashes also come in stronger than expected, then we should see a very compelling and positive end to the week across oil markets," Le Brun said.
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