Oil prices rebound with world markets

Global oil prices rebounded on Tuesday, reversing earlier losses on the back of buoyant global stock markets, while traders also shrugged off Chinese demand concerns and awaited key US data, analysts said. In late afternoon deals in London, Brent North Sea crude for delivery in July jumped $1.23 to $103.27 per barrel. New York's main contract, West Texas Intermediate (WTI) light sweet crude for July, gained 65 cents to $94.10 a barrel. Wall Street equities extended their rally in early trade on Tuesday, shrugging off a rise in the US trade deficit to follow European and Japanese shares higher, as stock market investors also awaited fresh economic data. At the same time, traders are eagerly awaiting the US government's weekly snapshot of energy inventories on Wednesday, followed by the all-important non-farm payrolls (NFP) report on Friday. The NFP figures are likely to provide clues on whether the Federal Reserve will maintain its economic stimulus measures. Other US data due this week will include industrial output numbers and the Fed's outlook on economic conditions. Fed chairman Ben Bernanke had spooked markets last month when he said that the US central bank could taper or scale back its stimulus measures sooner rather than later, if economic conditions improved. "All of the talk is around Friday's key payrolls data, with the US recovery under the spotlight and speculation rife surrounding Mr Bernanke's tapering timescale," noted analyst Tobi Morris at trading group CMC Markets UK. In earlier Asian trading, world oil prices had fallen on renewed concern over weakening demand from China, which is the world's biggest energy consuming nation. Global banking giant HSBC said Monday its reading of China's manufacturing activity shrank more than first reported in May, confirming the first contraction in seven months. HSBC's final purchasing managers' index (PMI) reading for May came in at 49.2, the lowest for eight months and worse than the preliminary 49.6 announced on May 23. A reading below 50 indicates contraction in the sector. The softer China numbers coincided with data showing that US manufacturing activity also contracted slightly in May, continuing a slowdown tied both to slower government spending and weaker growth abroad. The Institute for Supply Management purchasing managers' index for May fell to 49.0, one point below the line between growth and contraction, compared with a positive 50.7 in April. The slowdown comes amid record-high crude inventories in the United States which puts downward pressure on prices.