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Oil prices surge on strong manufacturing data

Last updated: 09:44 01 Dec 2010 EST, First published: 10:44 01 Dec 2010 EST

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Oil prices advanced today, riding positive manufacturing data that was released in the US, UK and China, improving the outlook for energy demand.

Yesterday’s update on the Chicago purchasing managers’ index (PMI) climbed from 60.6 in October to 62.5 in November.

Today it was reported that the Markit/CIPS PMI in the UK rose from 55.6 to 58, hitting the highest level since 1994, while China’s PMI advanced from 54.7 in October to 55.2 in November.

Meanwhile, the US dollar declined against the euro today after Portugal successfully raised €500 million in a bond auction, calming concerns about Europe’s debt situation.

A weaker US dollar makes crude oil cheaper for holders of other currencies, lifting demand.

In addition to that, the American Petroleum Institute (API) reported that US crude stockpiles shed 1.14 million barrels last week, signalling an increase in demand in the world's largest energy consumer.

US light, sweet crude for January delivery climbed to US$85.68/barrel, while February crude reached US$86.24/barrel on the New York Mercantile Exchange (NYMEX).

On the ICE Exchange, January Brent Crude surged to US$97.70/barrel. Brent for February delivery last traded at US$87.77/barrel.

Supermajors Shell (LON:RDSB) and BP (LON:BP) climbed 3% and 1.3% respectively.

BG Group (LON:BG) and Cairn Energy (LON:CNE) tacked on nearly 2%.

Tullow Oil (LON:TLW) rose marginally.

Oil and gas engineering firms Petrofac (LON:PFC) and Amec (LON:AMEC) advanced 4.5% and 4% respectively.

Midcaps followed the trend.

Heritage Oil (LON:HOIL) led the way with a 2.6% advance.

Melrose Resources and Premier Oil (LON:PMO) added just over 2%.

JKX Oil & Gas (LON:JKX) and Soco International (LON:SIA) advanced 1.4% and 1.2% respectively.

Salamander Energy (LON:SMDR) rose 1%.

Service company Wood Group (LON:WG) rallied 6%.

Gas producer and explorer Regal Petroleum (LON:RGM) and oil and gas explorer operating in East and Central Africa Dominion Petroleum (LON:DPL) were among the top risers in the sector, advancing 10% and 11% respectively.

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