Crude Oil Gains as Chinese Economic Growth Counters Europe Debt Concern
Oil rose, trimming the biggest decline in almost two weeks, as signs of accelerating economic growth in China, the world’s biggest energy consumer, countered concerns that Europe’s debt crisis is worsening.
Futures gained as much as 0.6 percent after a report showed Chinese manufacturing expanded at the fastest rate in seven months in November. Crude also advanced as the dollar declined for the first time in four days, increasing the appeal of commodities to investors. U.S. government data may show oil stockpiles shrank last week.
“China’s economy will continue to expand as much as possible and in five years their oil consumption will be much bigger,” said Tetsu Emori, a commodity fund manager at Astmax Ltd. in Tokyo. “Currently the market is more focused on the dollar and the euro and worried about the credit issues in Europe.”
The January contract rose as much as 51 cents to $84.62 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.57 a barrel at 3:40 p.m. Singapore time. Yesterday, futures lost 1.9 percent, the biggest one-day decline since Nov. 17.
China’s Purchasing Managers’ Index increased to 55.2 from 54.7 in October, according to the country’s logistics federation today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.
Oil prices slumped yesterday as concern mounts that Europe’s debt problems are spreading to countries including Spain, Portugal and Italy. The European Union approved an 85 billion-euro ($111 billion) rescue package for Ireland Nov. 28.
The crisis has depressed the euro against the dollar, limiting the appeal of commodities priced in the U.S. currency. It was at $1.3038 today, up 0.4 percent, as the greenback fell against all but one of its 16 major peers.
Oil also advanced before an Energy Department report that may show U.S. crude and distillate fuel stockpiles declined last week. Oil capped its third monthly increase in November, climbing 3.3 percent. Prices are up 6.6 percent this year.
U.S. inventories of distillates, which include heating oil and diesel, dropped 1.1 million barrels, according to a Bloomberg News survey of analysts before today’s report. The industry-funded American Petroleum Institute yesterday said they climbed 224,000 barrels.
Supplies of crude declined 1.15 million barrels, according to the median of 16 responses in the survey. The API yesterday said they dropped 1.14 million barrels.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Brent crude for January settlement rose as much as 62 cents, or 0.7 percent, to $86.54 a barrel on the ICE Futures Europe exchange in London. It dropped 1.6 percent to $85.92 yesterday.
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