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Oil steadies as supply worries ease

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Oil steadies as supply worries ease
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Oil prices steadied on Monday after slipping as the threat of large-scale US military attacks on Syria was scaled back.

The cost of crude had been pushed up by worries about the Syrian conflict spreading threatening supplies.

Markets were concerned strikes by Western forces against Syria would disrupt Middle East oil exports at a time when they are already coping with the loss of output from Libya and Sudan.

On Monday oil did get a boost from improved factory activity in China and the eurozone reviving hopes of economic growth and increased demand for oil.

Brent was still over $114 a barrel having risen nearly three percent last week. At one stage on Monday it fell as low as $112.20 a barrel.

“Oil would have been pushed lower had it not been for the China data we saw over the weekend,” said Ben Le Brun, market analyst at OptionsXpress.

“The market is keeping an eye on the Middle East and developments in Syria, but we have seen some tensions easing.”

US oil futures floor trading was closed on Monday for a public holiday.

Demand factors

China’s factory activity expanded at its fastest in more than a year in August with a jump in new orders, official data showed.

In another sign that China may have averted a sharp slowdown in its economy, a separate private survey showed China’s factory activity expanded for the first time in four months in August as domestic demand rebounded.

Strong orders for euro zone manufactured goods also helped the bloc’s factory activity rise at the fastest pace in over two years in August and led to backlogs of work for the first time since mid-2011, a survey showed on Monday.