Brent holds near $118 after euro zone data; G20 meet in focus

Reuters

* Euro zone factory output rises for first time since Aug

* Lower IEA demand growth outlook contrasts OPEC, EIA

* Coming up; Euro zone Q4 GDP; 1000 GMT

By Ramya Venugopal

SINGAPORE, Feb 14 (Reuters) - Brent crude was steady near$118 per barrel on Thursday after positive euro zone data,although a subdued demand outlook by the International EnergyAgency (IEA) may weigh on prices.

Oil, like other riskier assets, has been drawing strengthfrom indications that a moderate global economic recovery isgaining traction. This belief got another shot in the arm asrecent data showed euro zone industrial output rose in Decemberfor the first time in four months.

But optimism that oil consumption would improve as theeconomy revives was offset by the IEA's move to cut its 2013demand growth forecast by 90,000 barrels per day to 840,000 bpd,contrasting a rise in forecast by two other agencies.

April Brent futures which began trading on Thursday,added 10 cents to $117.98 per barrel by 0338 GMT.

U.S. crude added 14 cents to $97.15 per barrel, but arise in crude stockpiles in the world's biggest oil consumer maykeep a lid on gains.

Trading volumes have been lower with China closed this weekfor the Lunar New Year holiday.

"Oil has been well supported by economic data and there ismore confidence in the markets," said Ben le Brun, analyst atOptionsXpress in Sydney. "But I think Brent will be capped at$120 and we will see strong technical resistance there."

Investors are now waiting for the outcome of the meeting offinance ministers and central bankers of the G20 countries duelater this week which may throw more light on the outlook forthe global economy.

Factory output in the euro zone increased in December forthe first time since August, by 0.7 percent, beating analystexpectations for a 0.2 percent increase.

That adds to purchasing manager surveys released earlierthat showed factory activity in the United States and Chinapicked up, while the service sector in all three regions showedsigns of optimism.

Given increasing signs of a recovery in the global economy,the U.S. Energy Information Administration and the 12-memberOrganization of the Petroleum Exporting Countries forecast afaster-than-expected growth in global oil demand thisyear.

Oil prices may also be supported by geo-political tensions,especially after a nuclear test by North Korea and worseningunrest in Syria. (Editing by Himani Sarkar)

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