Crude oil futures rally to 6-week high on EU hopes, China data

Forexpros - Crude oil futures extended sharp gains on Monday, rallying to a six-week high amid hopes for a breakthrough on resolving the euro zone's debt crisis and as data pointed to an improvement in Chinese manufacturing. On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at USD89.84 a barrel during U.S. morning trade, surging 2.8%. It earlier rose by as much as 2.92% to trade at USD89.94 a barrel, the highest price since September 16.European leaders moved closer to an agreement on bank recapitalization on Sunday, while Germany and France neared an agreement on expanding the firepower of the euro zone's bailout fund. But divisions over restructuring Greek debt remained and a final agreement was not expected until Wednesday's meeting. "There have been hours and hours of discussions. We haven't succeeded yet, but we have until Wednesday," French Prime Minister Nicolas Sarkozy said earlier.Crude prices found further support after a preliminary reading of the HSBC China purchasing managers' index rose to a five-month high of 51.1 in October, moving into expansion territory for the first time in four months. German lender Commerzbank said in a report earlier that, "The China PMI got the market fired up, with a lot of shorts covering as the data suggested that the slowdown in China may have peaked."China is the world's second largest oil consuming nation and manufacturing numbers are used as indicators for fuel demand growth.Crude futures briefly pared gains during European morning trade following the release of data showing that manufacturing activity in the euro zone slumped to a 27-month low in October, while a separate report said that manufacturing output in Germany also dropped to a 27-month low. Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery gained 0.82% to trade at USD110.45 a barrel, with the spread between the Brent and crude contracts standing at USD20.61 a barrel. Oil traders continued to monitor developments in Libya in order to asses how quickly oil production in the country would return to pre-war levels, following the death of longtime Libyan leader Muammar Gaddafi on Friday.Libya, Africa's biggest holder of crude oil reserves, has the capacity to produce roughly 1.6 million barrels of crude a day. The country has produced approximately 100,000 barrels of oil per day since the civil war began in February.
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