Brent crude futures rise to $111
Spending cuts that came into effect on Friday have led to uncertainty over growth prospects in the world's largest economy. Photograph: Bloomberg
Brent crude futures rose towards $111 (€85.18) per barrel this morning, reversing a five-day losing streak after China pledged to keep its economy growing at 7.5 per cent.
Gains were modest as investors eyed a raft of medium-term concerns, including rising supplies, a fiscal crisis in the United States and the continuing crisis in the euro zone.
Front-month Brent crude futures rose 45 cents to $110.54 per barrel at in early trade, while US crude added 27 cents to $90.39.
Brent tested its 2013 low in the previous session, dropping as low as $109.58, the lowest since January 17th as US crude hit its lowest since December 26th at $89.33 per barrel.
China will boost fiscal spending this year to deliver economic growth at 7.5 percent, outgoing premier Wen Jiabao said today ahead of the country's annual parliamentary meetings.
The statement countered concerns about demand in the world's second biggest oil market after purchasing manager surveys over the weekend suggested growth in China's key manufacturing and service sectors may be slowing.
China's factory growth as well as services growth slowed to multi-month lows, two purchasing manager indexes showed, suggesting moderating growth in the economy. PMIs in Europe also showed problems are ongoing there.
In the US, about $85 billion of automatic spending cuts that came into effect on Friday threw a cloud of uncertainty over growth prospects in the world's largest economy.
The International Monetary Fund estimates that the cuts, if fully implemented, will shave 0.5 per centage points from the US growth rate.
Markets are now awaiting the US non-farm payrolls data due this week for further clues to the health of the US economy and the futures of the Federal Reserve's monetary easing programme, analysts said.