Oil prices higher in Asia

AP PHOTO

SINGAPORE–Oil prices rose in Asian trade Friday, with demand boosted by a weaker dollar but lingering concerns over China’s economy capped gains, analysts said.

New York’s main contract, West Texas Intermediate (WTI) for delivery in September, was up five cents to $105.54 a barrel in mid-morning trade, while Brent North Sea crude for September added 12 cents to $107.77.

“We’re seeing modest gains and pricing is supported by a slightly weaker dollar,” said Victor Shum, managing director at consultancy IHS Purvin and Gertz.

Dollar-priced oil becomes cheaper when the greenback weakens, bolstering demand and pushing prices higher.

Shum added that gains were capped by concerns over the slowing Chinese economy, the second biggest in the world.

“The China factor is important and there’s just more and more data showing that the economy is slowing,” he told AFP.

“China is expected to account for a majority of oil demand going forward and with a slowing Chinese economy, gains in oil futures will be limited.”

The latest data out of China on Wednesday showed the country’s manufacturing activity contracted to an 11-month low in July, according to an HSBC survey.

It was the first evidence of the Asian economic giant losing further momentum in the third quarter.

HSBC said its preliminary purchasing managers’ index (PMI) hit 47.7 this month, down from a final 48.2 in June and the lowest since August.

The index tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. A reading below 50 indicates contraction, while anything above signals expansion.

China’s economy has been weakening this year, with growth in the April-June period dipping to 7.5 percent, from 7.7 percent in the first quarter and 7.9 percent in October-December.