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Crude Oil Trades Near Three-Week High as U.S. Labor Data Fuels Optimism

Oil traded near the highest in almost three weeks after greater-than-forecast growth in U.S. private employment bolstered optimism fuel demand will increase in the world’s biggest crude-consuming nation.

Futures added 3.1 percent yesterday as companies in the U.S. boosted payrolls the most since November 2007, figures from ADP Employer Services showed. Prices also rose after manufacturing grew in Europe and China, the largest energy user, and cold weather hit the northern hemisphere.

“The economic news certainly provided some optimism,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “Europe, China and the U.S. are all looking quite good. The market is also concerned about the weather in Europe.”

The January contract was at $86.53 a barrel, down 22 cents, in electronic trading on the New York Mercantile Exchange at 10:23 a.m. Singapore time. Yesterday, it added $2.64 to $86.75, the highest settlement since Nov. 11. Oil gained 3.3 percent last month and is 9 percent higher this year.

U.S. payrolls rose by 93,000 in November, according to the data. The Institute for Supply Management reported yesterday that manufacturing in the U.S. expanded for a 16th straight month in November.

Europe’s manufacturing industries expanded at the fastest pace in four months in November, led by Germany, the region’s largest economy. A gauge of manufacturing in the 16-nation euro area advanced to 55.3 from 54.6 in the previous month, London- based Markit Economics said yesterday.

Paris Cold

China’s Purchasing Managers’ Index climbed to 55.2 from 54.7 in October, the country’s logistics federation said yesterday. That was higher than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.

Paris temperatures will fall to minus 6 degrees Celsius (23 Fahrenheit) today compared with an average of 6 degrees for this time of year, according to data from Customweather Inc. Cold weather boosts demand for heating oil.

U.S. crude oil stockpiles increased by 1.07 million barrels to 359.7 million in the week ended Nov. 26, an Energy Department report showed yesterday. Inventories were forecast to decrease by 1.15 million barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Gasoline Inventories

Gasoline inventories climbed 561,000 barrels to 210.1 million, the Energy Department said. Distillate fuel supplies, including diesel and heating oil, slipped 194,000 barrels to 158.1 million barrels.

Inventories at Cushing, Oklahoma, the delivery point for New York oil futures, jumped 2.7 percent to 34.5 million barrels, a third week of increases.

The Cushing gains has increased the discount between January New York futures and London’s Brent contract to $2.14 a barrel today compared with $1.05 a month ago.

Brent crude for January settlement was at $88.62 a barrel, down 24 cents on the London-based ICE Futures Europe exchange. The contract rose $2.95, or 3.4 percent, to $88.87 yesterday.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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