Oil up in Asia as US, China concerns ease

Oil prices edged higher in Asia today as weak US data suggested the Federal Reserve will hold off on ending its aggressive bond-buying programme, while concerns over China's liquidity crisis also eased, analysts said.

New York's main contract, West Texas Intermediate light sweet crude for delivery in August, was up 12 cents at $95.62 a barrel and Brent North Sea crude for August gained 24 cents to $101.90 in morning trade.

"Overall, the US data has added cheer to the market because it signals the US economy still needs to improve before the end of stimulus measures," Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.

The gains tracked a similar uptick in Asian equity markets after the US Commerce Department slashed the estimate of first quarter growth from 2.4% to 1.8% yesterday.

The market took the weaker economic data to mean the Fed will maintain its $85 billion-a-month bond-buying programme.

Fed chairman Ben Bernanke last week said the US central bank could begin to wind down the bond purchases if the economy continues to improve.

Prices were also supported by assurances by China that it would move in to stabilise a liquidity crisis that had gripped the country's financial markets.

The People's Bank of China (PBoC) said on Tuesday it had made money available to some firms in a bid to prevent a cash crunch that had sent shares into a tailspin.

"The gloom over the Chinese money market has eased, and is having a positive effect on oil prices," McCarthy said.