Brent crude rises above $110 on China data, Mideast

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Crude oil rose above $110 a barrel on Monday, as geopolitical tensions in the Middle East offset concerns about the looming U.S. fiscal cliff and weak data from Japan.

Fresh violence in the Middle East, which supplies a third of the world's oil, as well as recent data showing China's implied oil demand surged in October, supported prices.

However, worries about the United States, the world's top oil consumer, slipping into recession as a result of about $600 billion in expiring tax cuts and spending reductions capped gains.

Data showing that Japan's economy shrank 0.9 percent in the July-September period from the previous quarter also put pressure on oil prices and suggested the economy may be heading into a mild recession.

Brent crude rose 75 cents to $110.15 by 1500 GMT, after gaining more than 2 percent on Friday. U.S. oil was up 25 cents at $86.32 after finishing up more than 1 percent last week to end a three-week slide.

"The battle continues between the negativity from the slowing of the global economy compared to what global stimulus programs might do to the economy going forward, while geopolitics have continued to remain an issue for market participants," said Dominick Chirichella of New York's Energy Management Institute.

The Greek government won parliamentary approval for its 2013 budget on Sunday, seen as a key step in reviving its stalled international aid, but German Finance Minister Wolfgang Schaeuble said that the troika of international lenders to Athens was unlikely to deliver its full report in time for the euro zone finance ministers' meeting on Monday.

"We expect further consolidation and thin trading conditions with low volatility until "the dust in the Eurozone settles"," said Myrto Sokou, a senior research analyst at Sucden Financial.

PRICE SUPPORT

Violence in the Middle East lent some support to prices on Monday, as Syrian warplanes tore along the Turkish frontier and bombed the rebel-held town of Ras al-Ain just inside the border, testing of Turkey's pledge to defend itself from any violation of its territory or any spillover of violence from Syria.

Israel's army said it fired tank shells into Syria and scored "direct hits" in response to a Syrian mortar shell that struck the Israeli-occupied Golan Heights, underscoring international fears that Syria's civil war could ignite a broader regional conflict.

"Drawing Israel into the Syrian conflict even on a limited scale would clearly raise the geopolitical stakes and make any political solution to the conflict more difficult," JBC Energy said in a note to clients.

Data pointing to growth in oil demand in China, the world's second-largest fuel user, and news that the Buzzard oilfield in the North Sea shut down again, also propped up prices.

Implied oil demand in China grew 6.5 percent in October from a year earlier, close to September's record high, bolstered by fuel inventory building and new production capacity.

Buzzard, the largest of the oilfields contributing to the Forties crude blend, suffered a production glitch on Saturday, soon after returning to full output after a maintenance shutdown, and output remained halted on Monday, a trade source said. (Additional reporting by Manash Goswami in Singapore; Editing by Anthony Barker)



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