By Jessica Jaganathan
SINGAPORE (Reuters) - Brent crude oil futures held near $112 a barrel on Monday, underpinned by upbeat economic data from the United States and China, the world's first and second largest oil consumers.
But the prospect that a strengthening U.S. economy could persuade the Federal Reserve to begin curbing its commodity-friendly stimulus dragged on prices.
Brent crude oil futures had slipped 4 cents to $111.57 a barrel by 0732 GMT, after rising more than $1 in the previous session.
U.S. crude oil futures gained 5 cents to $97.70, after ending Friday with their largest weekly percentage gain since July 5.
"The U.S. and China are two big growth engines of the world economy, so any improvements in terms of their economies is going to reflect well in future crude oil demand," said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
"But offsetting that is the potential for early tapering coming out of the U.S. economy. If they spring a surprise in the markets in December, then I think that will be a negative for oil prices overall because there's not as much money finding its way into the commodity market overall, and in turn to risk assets."
U.S. data released on Friday showed the jobless rate fell last month to its lowest since November 2008, fuelling speculation that the Fed might act when it holds its next policy meeting on December 17-18.
And China released trade figures on Sunday that showed exports well above forecasts in November, rising 12.7 percent from a year earlier, while imports up 5.3 percent added to recent signs that economic growth is stabilising.
Crude imports by China, the world's second largest consumer, reached 23.56 million tonnes in November, or 5.73 million barrels per day (bpd), up 19.1 percent from the previous month on a daily basis.
"Chinese apparent demand could pick up moderately, as ... Quanzhou and Sichuan refineries come online before year-end and runs increase at refineries that were in turnaround in October and November," Sijin Cheng, an analyst at Barclays said in a note.
China is due to release its industrial output data on Tuesday.
PRICE OUTLOOK
The focus on the Fed's upcoming meeting is expected to dominate market sentiment in the days ahead.
"The market is probably prepared to sit back and wait in view of the fact that there's been a pretty significant rally over recent days that tilts the balance against more aggressive buying as we are already well off the lows," said Ric Spooner, chief market analyst at CMC Markets.
A decline in U.S. crude inventories after a 10-week increase had buoyed prices along with Friday's jobs data.
Oil prices were also supported after Transcanada Corp said the Keystone pipeline would be in service by next month to deliver crude from U.S. storage hub Cushing, Oklahoma, to refining markets.
Weather-related production outages also supported prices, analysts said.
North Sea oil producers cut output and moved staff from some platforms as a major storm blasted toward mainland Europe in what meteorologists warned could be the worst weather to hit the continent in years.
"Potential North Sea production cuts due to severe weather in Europe could see Brent perform better this week," analysts at ANZ said in a note.
Brent ended 1.7 percent higher in the previous week.
Cold weather also dented oil and gas production in the United States and could further crimp output in top crude-producing states, such as Texas and North Dakota.
