* U.S. ISM Manufacturing index rises to 53.4, beats forecast
* BP shuts down North Sea platform, crude loadings delayed
* Coming up: U.S. API weekly crude stocks; 2030 GMT
(Updates prices)
By Francis Kan
SINGAPORE, April 3(Reuters) – 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 in 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 U.S.
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 U.S., 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 U.S. non-farm payrolls report.”
Front-month Brent crude fell 41 cents to $125.02 a
barrel by 0607 GMT, after settling up $2.55 at $125.43.
U.S. crude futures lost 35 cents to $104.88, after
rising by more than $2 in the previous session.
DISRUPTION THREAT SUPPORTS PRICES
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.
The Institute for Supply Management’s index of U.S. 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 U.S. 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.
Ahead of weekly reports on U.S. oil inventories, crude
stocks were expected to have risen last week, according to a
Reuters survey of analysts on Monday.
EURO ZONE, JAPAN DEMAND
However, upbeat sentiment was dampened by ongoing concerns
of slowing oil demand in major consumers Europe and Japan.
The euro zone’s manufacturing sector shrank for an eighth
month and at a faster pace in March, according to Markit’s
Eurozone Manufacturing Purchasing Managers’ Index.
There was also uncertainty surrounding Japan’s oil demand,
after a top government spokesman said that a ministerial-level
meeting on Tuesday would not yield a decision on the restart of
two nuclear reactors.
All but one of Japan’s 54 commercial nuclear reactors are
now shut after going offline for routine maintenance, unable to
restart due to local communities’ concerns over nuclear power
safety.
“Despite the potential for official authorization to restart
some nuclear plants in the next few weeks, we project that it
may not shift balances enough to materially alter demand for oil
at the summer peak,” analysts at J.P. Morgan said in a research
note.
(Editing by Clarence Fernandez)
