El Saharara oil field, Libya

The changing landscape of China’s manufacturing industry and ongoing tensions in the Middle East have helped oil prices continue to gain momentum in December, with prices approaching $112 per barrel today.

Further to the 2.3% growth experienced in November, the release of Chinese data pushed Brent futures up by 13 cents to $111.42 and US crude to $89.80, after showing some resistance at $88.75.

A new survey of private factory managers, called the HSBC Purchasing Managers’ Survey (PMI), observed that the Chinese manufacturing sector has demonstrated active business, breaking 13 months of sluggishness.

The findings of the new survey are similar to those of another survey by the National Bureau of Statistics, indicating signs of recovery for the world’s second biggest oil consumer.

China will release more data on its industrial output and trade, which is expected to offer a clearer picture of the country’s recovery.

With continuing tensions between Israel and Palestine, as well as Egyptian protests and conflict in Syria, developments in the Middle East have prompted a major rise for the oil markets.

The US Senate’s approval for fresh sanctions on global trade with Iran on Friday, aiming to put economic pressure on Tehran, helped oil prices rally.

Among all the factors, investors have showed the most concern over the uncertainty in the talks to address the looming fiscal cliff that could derail the US economy, and traded cautiously, capping price gains to some extent.

Image: Oil prices have continued their momentum in December after posting a 2.3% increase in November. Photo courtesy of Javier Blas.