Oil rose above $123 a barrel on Thursday as better-than-expected economic data from China and the U.S. bolstered the demand outlook and concern persisted about supply disruption from Iran, Reuters reported.
A Chinese government survey on Thursday showed factories' output grew more than expected in February, following on from a report on Wednesday showing the U.S. economy grew faster than initially thought in the fourth quarter.
Brent crude rose 78 cents to $123.44 a barrel by 1147 GMT, rebounding from an earlier decline to as low as $122.49 and a dip down to $120.50 on Wednesday. U.S. oil was up 14 cents to $107.21.
Brent posted a monthly gain of 10.5 percent in February and reached $125.55, its highest intraday price since May 2, on Friday, supported by growing tension between the West and Iran about its nuclear program and concern about cuts in its oil supply.
Prices fell earlier this week as technical indicators such as the relative strength index for Brent suggested the rally was overdone, and some participants still see signs that the oil market rally is fragile.
Supplies from Iran, the second-largest OPEC producer after Saudi Arabia, remain the key risk for the global market.
A U.S. government report said on Wednesday Western sanctions on Iran were already disrupting its oil exports, and further restrictions could tighten global oil markets.
U.S. and European insurance companies are declining to insure deliveries of Iranian oil even before the full Western sanctions go into effect, according to the report by the Energy Information Administration on Wednesday.
The risk of future disruption to supplies from Iran has pushed signs that actual oil supplies are ample, and output from the Organization of the Petroleum Exporting Countries is rising, onto the back burner.
U.S. crude oil stockpiles rose 4.16 million barrels last week, the EIA reported on Wednesday, a bigger increase than analysts expected which pressured U.S. crude.
Edited by: S. Isayev