Oil prices up in Asian trade after US and European economies expand

The oil prices were up in Asian trade today, buoyed by optimism over the US and European economies and data showing China's manufacturing activity continued to expand in January, analysts said.

New York's main contract, light sweet crude for delivery in March gained two cents to $97.51 a barrel and Brent North Sea crude for March delivery increased 31 cents to $115.86.

"There has been a lot of good news. Europe is on a brighter note, and the US has deferred debt ceiling talks. General optimism continues to buoy the market," said Yang Weiming, premium client manager at IG Markets, Singapore.

US lawmakers yesterday suspended the country's debt ceiling until May, giving them three months to hold high-stakes budget negotiations to avert a potentially catastrophic default.

While the data showed the economy shrank 0.1 per cent in the fourth quarter of 2012, there were upbeat signs for the economy, with private consumption, business investment and housing all seeing growth.

In Europe, the eurozone economic sentiment improved across all sectors in January, according to an index compiled by the European Commission. In China data showed the official purchasing managers' index (PMI) came in at 50.4 in January, a slight moderation from 50.6 in the previous month but still showing growth.

A separate PMI from British bank HSBC came in at a two-year high of 52.3 for last month, up from a preliminary 51.9 released last week and a final 51.5 in December. Its survey focuses on smaller enterprises. A reading above 50 indicates expansion, while anything below points to contraction.