The price of oil extended gains to around $94 a barrel Tuesday, bolstered by encouraging manufacturing data from the world's top two economies and predictions of a drop in U.S. crude stocks for the first time in over two months.
By early afternoon in Europe, benchmark U.S. crude for January delivery was up 10 cents to $93.92 a barrel on the New York Mercantile Exchange. The contract added $1.10 to close at $93.82 on Monday.
Oil prices were buoyed by fresh data pointing to steady manufacturing growth in the U.S. and China.
U.S. manufacturing grew in November at the fastest pace in 2 1/2 years as factories ramped up production, stepped up hiring and received orders at a healthy clip. Manufacturing activity has now expanded for six straight months after hitting a rough patch in the spring, suggesting that growth was solid in the October-December quarter.
Chinese manufacturing also continued to grow slightly last month, two surveys showed, in evidence that a recovery in the world's No. 2 economy was continuing, albeit at a modest pace.
Investors are looking to a meeting of the Organization of Petroleum Exporting Countries in Vienna on Wednesday for an update on production levels.
OPEC is expected to keep intact its daily output target of 30 million barrels a day, although the group may come under pressure to reduce production if some supply sources suffering disruptions return to normal.
"Current stability on the oil market largely comes courtesy of involuntary supply outages in Libya and elsewhere," said analysts at Commerzbank in Frankfurt in a note to clients. "As soon as these are resolved, the pressure on OPEC to take action is likely to increase."
Markets will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Nov. 29 is expected to show a draw of 1.25 million barrels in crude oil stocks and a build of 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
U.S. crude supplies have risen for 10 consecutive weeks, mostly due to increased domestic production. They stood at 391.4 million barrels on Nov. 22, 13.3 percent above their five-year average.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration -- the market benchmark -- will be out on Wednesday.
Brent crude, a benchmark for international oils, was down 26 cents at $111.19 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
-- Wholesale gasoline added 0.41 cent to $2.6825 a gallon.
-- Heating oil lost 0.66 cent to $3.0435 a gallon.
-- Natural gas fell 2.4 cents to $3.964 per 1,000 cubic feet.
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