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Oil futures extend gains after upbeat U.S. ISM factory data

Published 12/02/2013, 10:06 AM
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Investing.com - Crude oil futures were higher on Monday, after data showed that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November.

On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD93.63 a barrel during U.S. morning trade, up 1%.

New York-traded oil futures held in a range between USD92.57 a barrel, the daily low and a session high of USD93.68 a barrel.

The January contract settled up 0.46% on Friday to end at USD92.72 a barrel.

Oil futures were likely to find support at USD91.77 a barrel, the low from November 27 and resistance at USD93.90 a barrel, the high from November 29.

Oil prices climbed to the highest levels of the session after the Institute for Supply Management said its index of purchasing managers rose to a 31-month high of 57.3 in November from a reading of 56.4 in October.

Analysts had expected the ISM index of purchasing managers to inch down to 55.0 last month.

A separate report showed that U.S. manufacturing activity rose to a 10-month high of 54.7 in November, up from a preliminary reading of 54.3 and compared to 51.8 in September.

Investors now looked ahead to key U.S. economic data later in the week to further gauge the strength of the economy and the need for stimulus.

The U.S. is to release data on third quarter gross domestic product on Thursday, while November’s nonfarm payrolls report is scheduled for Friday.

The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labor and housing markets.

The U.S. central bank’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere, in the euro zone, data showed that the bloc’s manufacturing PMI rose to a two-year high of 51.6 last month from October's 51.3, slightly higher than a preliminary estimate of 51.5.

However, Spain’s manufacturing sector contracted for the first time since July last month, while the French manufacturing sector contracted for the 21st straight month.

Meanwhile, in China, data showed that the country’s final HSBC Purchasing Managers Index came in at 50.8 for November, slightly above forecasts for 50.5, and beating the flash estimate of 50.4, but was still slightly lower than October's final reading of 50.9.

The data was published one day after a government report showed that China’s manufacturing purchasing managers' index held steady at an 18-month high of 51.4 in November, compared to forecasts for a decline to 51.1.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for January delivery rose 0.5% to trade at USD110.23 a barrel. The spread between the Brent and U.S. crude contracts stood at USD16.60 a barrel.

London-traded Brent futures remained supported amid ongoing concerns over a disruption to supplies from Libya.

Market players looked ahead to a meeting of the Organization of the Petroleum Exporting Countries in Vienna later this week. OPEC is forecast to keep its supply target unchanged at 30 million a day on December 4.

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