Oil prices inched above $99 a barrel Wednesday as investors weighed encouraging economic data from China against a jump in U.S. crude inventories and signs of sluggish growth.
By early afternoon in Europe, benchmark crude for March delivery was up 63 cents at $99.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 30 cents to settle at $98.48 on Tuesday.
In London, Brent crude was up $1.15 at $112.13 a barrel on the ICE Futures exchange.
China unveiled a $2.5 billion fund to finance new small businesses, promising tax breaks and more lending for entrepreneurs, while the state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index rose 0.2 points to 50.5 in January from December's 50.3 on a 100-point scale. A figure above 50 indicates growth.
At the same time, HSBC Corp. said its China Manufacturing PMI was little changed at 48.8 from December's 48.7, suggesting a "moderate deterioration."
The American Petroleum Institute said late Tuesday that crude inventories rose 2.1 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 3.0 million barrels.
Inventories of gasoline fell 222,000 barrels last week while distillates added 970,000 million barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.
"Despite all the supply risks relating to Iran and Sudan, the oil market is currently characterized by excess supply, which explains the recent below-average trend in the price of crude oil," said a report from Commerzbank in Frankfurt.
Investors will be closely watching the latest U.S. employment data from January on Friday. The Conference Board said Tuesday that consumer confidence fell in January from December as Americans were more worried about their incomes, gas prices and business conditions.
The housing market also continues to struggle. Home prices fell in November for a third straight month in 19 of the 20 U.S. cities tracked by the S&P/Case-Shiller index.
"U.S. economic releases tilted toward the bearish side, and that these figures followed last Friday's negative GDP guidance conjured up images of some disappointing employment data," energy consultant Ritterbusch and Associates said in a report. "A difficult, choppy trading environment could be sustained well into February."
In other energy trading, heating oil rose 2.17 cents to $3.0726 per gallon and gasoline futures were up 2.06 cents to $2.9115 per gallon. Natural gas fell 8.7 cents to $2.416 per 1,000 cubic feet.
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Alex Kennedy in Singapore contributed to this report.
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