oil barrel

Oil prices gained today, as the economic outlook in China showed hope of a recovery, even as concerns over the US fiscal cliff continued to irk investors.

Brent crude rose today to stay at more than $108 a barrel, while US crude gained by 25 cents to $86.98, reported Reuters.

Data revealed that the manufacturing sector in China made a turnaround this month at a significant pace, sending positive signals among the investor fraternity that the country’s economy is on the path to growth.

In the US, an announcement by House of Representatives Speaker John Boehner accepting a tax rate hike for America’s richest was seen as the removal of a key Republican roadblock for a deal, which has been pending for a long time.

It is anticipated that if tax hikes of around $600bn and spending cuts scheduled for January 2013 are not avoided, it could push the world’s top oil consumer back into recession.

Tensions in the Middle East and concerns of oil supply disruption are also playing a key role in oil price gains.

Iran has witnessed its oil revenues coming down by half in 2012 from a year ago, as a direct result of sanctions imposed by Western countries due to its controversial nuclear programme.

However, the International Atomic Energy Agency expects to reach an agreement with the country in January 2013 to recommence an investigation into suspected nuclear weapon research that was stopped earlier.

However, a member of Iran’s nuclear negotiation team has stated that discussions between Iran and other Western super powers will not reach any conclusion.

Image: Alongside economic recovery signs of China, tensions in the Middle East and oil supply concerns are playing a key role in oil price gains. Photo courtesy of Lars Christopher Nøttaasen.