Oil Advances From One-Week Low on China Manufacturing

Oil rebounded from the lowest close in a week in New York after a Chinese manufacturing index signaled an economic slowdown may be easing in the world’s second-largest crude user.

Futures increased as much as 0.9 percent after slipping 4 percent yesterday. A preliminary reading for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics was at 49.5. If confirmed, that would be the highest since February. The final number in June was 48.2. Oil also rose before a government report that may show U.S. inventories fell for a fifth week, the longest stretch in a year.

“The primary factor driving some buying now is the Chinese manufacturing data,” said Victor Shum, the managing director of IHS Consulting in Singapore. “If the crude-inventory data comes in like the survey results, that would be supportive as well.”

Oil for September delivery gained as much as 80 cents to $88.94 a barrel in electronic trading on the New York Mercantile Exchange and was at $88.56 at 4:26 p.m. Sydney time. The contract yesterday decreased $3.69 to $88.14, the lowest since July 13. Prices are down 10 percent this year.

Brent crude for September settlement advanced 39 cents to $103.65 a barrel on the London-based ICE Futures Europe exchange. The contract yesterday slipped 3.3 percent to $103.26. The European benchmark’s premium to West Texas Intermediate was at $15.09, from $15.12 yesterday.

Oil Supplies

Oil in New York has technical support at $86.59 a barrel, along the lower of two so-called leading span lines that define an “ichimoku cloud” on the daily chart, according to data compiled by Bloomberg. The cloud is an area where buy orders tend to be clustered. Last week’s price rise stalled near the upper boundary, signaling chart resistance.

Crude stockpiles probably shrank 1.5 million barrels and gasoline inventories declined 500,000 barrels, according to the median estimate of seven analysts in a Bloomberg News survey before an Energy Department report tomorrow. U.S. refinery utilization probably fell 0.5 percentage points last week after dropping 0.7 percentage points the prior week, the survey shows.

The American Petroleum Institute will release separate inventory data today. 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.

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