NYMEX crude surges on Saudi King Abdullah's death, HSBC survey tempers

Investing.com - Crude oil prices surged in Asia on Friday after the death of Saudi Arabia's King Abdullah, a key U.S. ally on diplomacy and oil policies that raised questions about whether the succession plan would keep the bonds tight, and as a closely-watched survey of China's manufacturing sector indicated continued contraction.

The HSBC January initial estimate came in at 49.8, compared to December's final of 49.6, but the January flash output index ticked up to 50.1 from 49.9 in December, placing it just in expansion territory above 50.

"Domestic demand improved marginally while external demand remained solid," said Hongbin Qu, Chief Economist, China and joint head of Asian economic research at HSBC. "The labor market weakened and prices fell further. Today's data suggest that the manufacturing slowdown is still ongoing amidst weak domestic demand. More monetary and fiscal easing measures will be needed to support growth in the coming months."

On the New York Mercantile Exchange, crude oil for delivery in February jumped 1.88% to trade at $47.18 a barrel, down from earlier gains of more than 2%.

Overnight, West Texas Intermediate oil futures added to losses on Thursday, after data showed that oil supplies in the U.S. rose more than expected last week, exacerbating fears over a glut in supplies.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 10.1 million barrels in the week ended January 16, compared to expectations for an increase of 2.7 million barrels.

Total U.S. crude oil inventories stood at 397.9 million barrels as of last week.

The report also showed that total motor gasoline inventories increased by 0.6 million barrels, below expectations for a gain of 1.3 million, while distillate stockpiles decreased by 3.3 million barrels.

The data came out one day later than usual due to Monday's Martin Luther King, Jr. holiday in the U.S.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for March delivery shed 66 cents, or 1.34%, to trade at $48.38 a barrel on Thursday.

Earlier in the day, the European Central Bank announced that it would launch a €60 billion monthly bond buying program that would start in March and last until September 2016, in a bid to stave off the threat of deflation in the euro area and boost growth.

The QE announcement pressured the euro and sent the dollar higher, weighing on dollar-denominated commodities.