SINGAPORE: Brent crude was steady above $125 a barrel on Tuesday after sharp gains in the previous session, supported by fresh signs of a sustained recovery at the top oil consumer, the United States, and the prospect of tighter crude supplies from the North Sea.
Hopes for firmer oil demand rose after a key gauge of US manufacturing activity beat expectations in March, a day after data showed a similarly strong performance by China's factories last month. The upbeat data offset disappointing economic numbers from Europe.
However, trading is likely to stay rangebound for the rest of the week ahead of the long Good Friday weekend and as the market watches for key jobs data from the United States due on Friday.
"The mood has changed a bit with the good PMI numbers from China and the US, although the risks in the euro zone remain," said Victor Say, an analyst with Informa Global Markets in Singapore.
"The market is taking a breather today, and is likely to be subdued for the rest of the week. No one wants to be caught out during the long weekend, especially if there's a surprise from the US non-farm payrolls report."
Front-month Brent crude fell 31 cents to $125.12 a barrel by 0213 GMT, after settling up $2.55 at $125.43.
US crude futures lost 21 cents to $105.02, after rising by more than $2 in the previous session.
The threat of further supply disruptions also supported prices, as British oil major BP said on Monday it had shut the Valhall platform in the North Sea last week.
Traders said the shutdown led to loading delays of one of the four crude oil streams used for the global Brent price benchmark.
US OPTIMISM
The Institute for Supply Management's index of US factory activity rose to 53.4 in March from February's 52.4, topping economists' expectations and keeping the reading above 50, indicating expansion in the sector.
Adding to the optimism, the Energy Information Administration (EIA) said on Monday US oil demand in January was revised higher by 169,000 barrels per day (bpd) from the previous estimate, but that still left demand down 853,000 bpd, or 4.46 percent, from a year earlier.
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