Oil rose above $77 a barrel this morning, countering some of the previous session's drop, as manufacturing data from China helped to allay fears about the pace of the rebound in global energy demand.
HSBC's China Purchasing Managers' Index (PMI) rose for the seventh straight month in October, to an 18-month high of 55.4, pointing to sustained strength in the manufacturing sector.
US crude for December delivery rose 55 cents to $77.55 a barrel earlier today, reversing some of Friday's loss of $2.87. Brent crude rose 61 cents to $75.81.
While China has been a bright spark in the global economic picture, data from other countries has suggested the strength of the recovery was still fragile.
Oil fell 3.6 per cent on Friday, pressured by data that showed weaker US consumer sentiment in October and consumer spending cuts in September, which dashed hopes of a quick rebound in energy demand.
While the US economy has been kick-started into growth, stock investors still face an uncertain outlook as Wall Street gears up for comments from the Federal Reserve and a key report on employment this week.
European stocks were little changed soon after the opening, following on from losses in Asia. The dollar weakened against a basket of currencies.
Worries about the US financial sector resurfaced after CIT Group, a lender to small and mid-sized U.S. companies, filed for bankruptcy yesterday.
Oil reached a one-year high of $82 in late October. Renewed concerns about the pace of recovery prompted prices to snap four straight weeks of gains and fall 4.3 per cent last week.
Reuters