US crude oil advances more than 1%

Today’s bullish stock market and concerns over unrest in Egypt have buoyed oil prices.

Upbeat manufacturing data for various leading economic areas has given rise to a strong ‘risk-on’ sentiment in today’s trading, pushing equity prices up across the board and ushering in a broad commodity rally. Oil has been at the forefront of these rises, with US crude futures advancing 1.5% by mid-afternoon in New York, to stand at $97.85 per barrel.

Official Chinese data showed manufacturing PMI fell to 50.1 in June, down from May’s reading of 50.8. Although this indicates a slowdown in the pace of growth, the result was better than expected and, crucially, remains above the key 50-mark that divides growth from shrinkage.

Eurozone manufacturing PMI, meanwhile, climbed to 48.8 in June , showing a decent improvement from May’s 48.7 and beating expectations. Eurozone manufacturing remains deep in contraction, but there is consolation in the index moving in the right direction and the level marks a 16-month high, with Spain showing notable strength.

The Institute of Supply Management’s manufacturing index showed improvements in the US manufacturing sector, rising into expansionary territory in June with a reading of 50.9, well-up from May’s 49.0.

Geo-political risk is also supporting the price of oil, after millions took to the streets in protest in Egypt over the weekend, urging President Mohammed Morsi to resign. The head of the armed forces has given a 48-hour deadline for the government and rival parties to follow ‘the will of the people’ or be given a roadmap for peace from the military. That has raised worries that Middle-Eastern and North-African oil supplies could be disrupted.

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