* U.S. Congress passes bill to avert ‘fiscal cliff’
* China manufacturing data points to economic recovery
* Coming up: U.S. Dec ISM Manufacturing PMI; 1500 GMT
(Adds quotes, updates prices)
By Florence Tan
SINGAPORE, Jan 2 (Reuters) – Brent crude rose above $112 per
barrel to hit a one-month high on Wednesday as the U.S. Congress
approved a deal to avert a fiscal crisis, while promising data
from top energy consumer China also supported prices.
The United States averted economic calamity when lawmakers
approved a deal preventing huge tax hikes and spending cuts that
would have pushed the world’s largest economy off the “fiscal
cliff” into recession.
It also boosted investors’ appetite for riskier assets and
depressed the U.S. dollar against major currencies. A weaker
greenback makes dollar-denominated oil more affordable for
holders of other currencies.
Brent crude for February delivery rose $1 to $112.11
a barrel by 0647 GMT, its highest intraday price since early
December. Brent ended 2012 averaging over $111 a barrel, the
highest annual average on record, after geopolitical threats to
production offset worries about flagging oil demand.
U.S. crude was up 97 cents to $92.79 a barrel, after
rising earlier to $92.83, the highest since October.
“It’s a short-term positive,” Sijin Cheng, a commodities
analyst at Barclays Capital said. “It’s certainly been on
investors’ minds for a long time and any good news is quite a
relief.”
The United States will be tackling its debts next, and
President Barack Obama has vowed to avoid a repeat of last
year’s divisive fight with Congress.
Oil also gained support from robust Chinese data pointing to
a recovery at the world’s second largest economy and second
biggest oil consumer.
“That is adding to the demand picture of oil,” said Michael
McCarthy, a markets strategist at CMC Global Markets in Sydney.
China’s official manufacturing purchasing managers’ index
held steady in December at 50.6, adding to evidence that its
economy was picking up in the last three months of 2012 after
slowing for seven straight quarters.
“It’s further indication that China is recovering but we’re
not seeing a sharp rebound like the one we’ve seen a few years
ago,” Barclays’ Cheng said.
The brighter outlook has prompted speculators to raise their
net long positions in Brent crude oil futures and options for a
second week running, IntercontinentalExchange data showed on
Monday.
Technical charts showed Brent may rise further to $112.41 a
barrel after breaking through a resistance at $111.31, Reuters
market analyst Wang Tao said.
MIDEAST TENSIONS
Analysts expect tensions in the Middle East to keep oil
prices elevated in 2013.
“The Western sanctions on Iran due to the country’s nuclear
programme and the unrest in Syria remain the wild cards for oil
prices in 2013,” analysts at Global Risk Management wrote in
their 2013 outlook.
Iran is carrying out naval drills in the Strait of Hormuz,
aimed at showcasing its military capability in the shipping
route through which 40 percent of the world’s sea-borne oil
exports pass.
Iran has threatened to block the strait if it comes under
military attack over its disputed nuclear programme. The United
States has said it would not tolerate any obstruction of
commercial traffic through the strait.
Fighting continued in Syria as government war planes bombed
opposition-held areas on New Year’s Day.
On Friday, the leaders of Sudan and South Sudan will meet to
discuss how to improve border security and resume vital oil
flows. South Sudan stopped its entire oil production of about
350,000 barrels per day for most of 2012 following a dispute
with Khartoum on oil transit fee.
(Editing by Himani Sarkar and Miral Fahmy)
