US manufacturing grew in July at its fastest pace in two years, while a China industrial index beat expectations this week, Reuters reported. European factories also snapped two years of output declines, suggesting a euro zone recession may be near its end.
A commitment to easy monetary policy by European central banks and the Federal Reserve also boosted oil prices.
Brent crude oil futures had gained 42 cents to $109.96 per barrel on Friday morning, after earlier hitting $110.09, its highest since 3 April. Brent is tracked to rise 2.6% on the week after two weeks of losses.
US crude oil futures rose 68 cents to $108.57, heading for a 3.7% increase for the week.
“A lot of people are expecting the quantitative easing to continue for longer than expected, so money is still going into the oil markets,” Reuters quoted Newedge Japan commodity sales manager Ken Hasegawa as saying.
But with global inventories adequate, he added, oil prices were unlikely to remain strong.
The European Central Bank and the Bank of England on Thursday left their interest rates at record lows, a day after the Federal Reserve said the US economy still needed its support and made no mention of changes to its stimulus measures.
Any pullback on the Fed’s easy money policies could boost the dollar and drag on assets denominated in the currency.
Investors are waiting for a US employment report due later in the day that is expected to show the jobless rate near its lowest level in more than four years, which could strengthen demand from the world’s top oil consumer.
Data on Thursday showed US factory activity hitting a two-year high in July and first-time applications for jobless benefits hit a five-and-a-half-year low last week.
Brent’s premium over West Texas Intermediate narrowed to $1.40 per barrel as the positive data and the Fed comments pushed up the US crude oil prices.
“A lot of money has now seemed to have come to the US crude market and I suspect some short covering is happening,” said Hasegawa.
Concern over supply disruptions in Libya, Iraq and Nigeria also underpinned prices. The disruptions helped trim Opec output to a four-month low in July, according to a Reuters survey published on Wednesday.
Opec output averaged 30.25 million barrels per day, down from 30.38 million bpd in June, the survey found.
Iraq’s production has come under pressure as Sunni insurgents target its northern pipeline, while technical problems are curbing output in the south.
Europe’s biggest oil company, Shell, said on Thursday that a surge in oil thefts in Nigeria contributed to a lower second-quarter profit.
Information from Upstream was used in this report.