* U.S. manufacturing grew more than expected in Jan-ISM
* Weaker dollar and stronger equities help boost oil price
* Oil rebounds from five-week lows reached Friday
(Adds details throughout, previous dateline LONDON)
By Joshua Schneyer
NEW YORK, Feb 1 (Reuters) - Oil rose on Monday as stronger
U.S. manufacturing data prompted optimism about economic
recovery and a weaker dollar helped boost crude demand after
oil prices fell to five-week lows on Friday.
An industry report showed the U.S. manufacturing sector
grew in January at a faster rate than expected, in a sixth
straight month of expansion. The Institute for Supply
Management (ISM) index rose to its highest since August 2004, a
sign the world's top economy is recovering from the deepest
recession in decades, which could boost oil demand.
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U.S. crude for March delivery <CLc1> rose 90 cents to
$73.79 a barrel by 11:46 a.m. EST (1646 GMT). Prices touched
$72.43 on Jan. 29, their lowest level since Dec. 21. London
Brent crude <LCOc1> rose 87 cents to $72.33.
Oil prices fell more than 8 percent in January, pressured
by weak energy demand in the United States, worries about
fiscal turmoil in smaller euro zone countries and a stronger
U.S. dollar.
A weaker dollar and firming equities markets helped to push
oil prices higher on Monday, as optimism surrounding a U.S.
recovery prompted investors to funnel more money into assets
considered riskier, such as commodities and stocks. []
[]
"The (oil) market flushed out strongly last week, but now
we are starting to see some support for prices," said Gene
McGillian at Tradition Energy in Stamford, Connecticut. "The
ISM number, a rise in equities and the dollar's slight
weakening all support oil prices."
Oil prices often rise when the dollar weakens since it
makes the dollar-priced commodity cheaper for holders of other
currencies, boosting demand.
The dollar came under pressure on Monday after news that
U.S. President Barack Obama expected the U.S. budget deficit
would soar to a record in 2010. []
U.S. stocks rose after Exxon Mobil <XOM.N>, the largest
U.S. oil company, reported on Monday a better-than-expected 23
percent decline in its fourth-quarter profit. []
Royal Dutch Shell <RDSa.L> said on Sunday it had shut in
some crude production in Nigeria, a key African exporter, after
a crude oil pipeline was sabotaged over the weekend.
A spokesman for Nigeria's main militant group MEND said in
an email to Reuters that the group wasn't directly responsible
for the pipeline outage, which came a day after MEND called off
a three-month-old cease-fire and threatened to unleash "an
all-out assault" on Africa's biggest oil and gas industry.
[]
Analysts warned any rebound in oil prices could be
short-lived, since demand for crude in the United States still
has not rebounded strongly since the recession, prompting the
U.S. refining industry to run its plants near the lowest rates
since the 1980s.
U.S. stocks of distillate fuel, such as heating oil and
diesel, were 16 percent above five-year averages in late
January, according to government data.
"This is not a trend higher but a reaction after three
weeks of falls. The fundamentals have not improved. The market
is still over supplied and demand is not there yet," said Eugen
Weinberg, commodities analyst at Commerzbank in Frankfurt.
(Additional reporting by Christopher Johnson in London and
Fayen Wong in Perth; Editing by Lisa Shumaker)
