Current Oil Prices Rise with Stronger Manufacturing Activity in China

Oil prices are higher on signals that manufacturing in China is gaining strength.

On the New York Mercantile Exchange (NYMEX), the U.S. benchmark, light, sweet, crude, for delivery in January gained 61 cents to a crude price per barrel of $86.51 during the morning trading.

But, the increases seen in the current oil prices may be limited by concerns regarding the lack of developments in the important budget negotiations in Washington.

The initial version of HSBC Corp’s Purchasing Managers Index (PMI) showed a rise in the December index to 50.9 from the November index of 50.5. An index higher than 50 indicates that manufacturing activity is expanding.  The increase was a signal that China’s consumption of energy may be rising.

Still, traders are worried that the U.S. President and Republican Congress are still not close to reaching an agreement to lower the budget deficit of the United States prior to this year’s end. Without a deal, significant rises in taxes and reductions in government spending will automatically start on January 1, which can push the country into another recession.

Prices at the pump keep on falling, posting an overnight shed of one cent to a current gasoline price average of $3.29 per gallon.

On London’s ICE Futures Exchange, Brent gained $1.14 to a crude price per barrel of $109.05.

Elsewhere in the energy markets, heating oil gained 3 cents to $2.98 per gallon. The price of natural gas declined 7 cents to its lowest level since the latter parts of September, at $3.27 per thousand cubic feet. And wholesale gasoline increased 4 cents to $2.65 per gallon.

By: Chris Termeer