LONDON: Oil dipped below $111 per barrel on Thursday, as concerns over supply eased after a ceasefire took effect in the Gaza Strip, but uncertainty over its success and a recovery in Chinese manufacturing offered support.
Israel and the Islamist Hamas movement agreed to an Egyptian-sponsored ceasefire late on Wednesday to halt the eight-day conflict around Gaza kept a lid on oil price gains.
Although Israel is not an oil exporter, concern that oil-producing nations in the Gulf could become involved in the conflict around Gaza has led to fears of supply disruption.
"I think it will last - Brent should fall on that - but it seems as the market is pretty sceptical," said Thorbjørn Bak Jensen, an analyst at A/S Global Risk Management.
Brent crude futures slipped 34 cents to $110.52 a barrel by 0938 GMT, after earlier rising to a high of $111.17. US crude was unchanged at $87.38 a barrel.
China's vast manufacturing sector saw expansion accelerate in November for the first time in 13 months, according to a factory survey.
An uptick in economic activity indicators in October has cemented the view that a rebound in China's economy gathered momentum as it entered the fourth quarter, helped by a raft of pro-growth government policies in recent months.
But analysts expected the pace of recovery to be modest in the fourth quarter.
"I'm surprised Brent is so high ... there are a lot of predictions that all the weakness in China will eventually get sorted as the new leadership takes over, but it seems like they're not in a huge hurry to over-stimulate," said Tony Nunan, a risk manager at Mitsubishi Corp.
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