BLBG: Crude Oil Rises as Chinese Manufacturing Growth Accelerates
By Mark Shenk
Dec. 1 (Bloomberg) -- Crude oil rose after a report showed Chinese manufacturing expanded at the fastest pace in five years, bolstering hopes that fuel demand will increase in the world’s second-biggest energy-consuming country.
Oil advanced as much as 2 percent after the purchasing managers’ index for China, released today by HSBC Holdings Plc, rose to a seasonally adjusted 55.7 from 55.4, the highest since April 2004. OPEC oil output climbed 0.4 percent to 28.9 million barrels a day last month, a Bloomberg News survey showed.
“The Chinese manufacturing number is very strong and points to higher energy demand in the months ahead,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The Chinese headlines were enough to outweigh reports that OPEC is increasing production.”
Crude oil for January delivery gained $1.05, or 1.4 percent, to $78.33 a barrel at 10:05 a.m. on the New York Mercantile Exchange. Futures touched $78.85, the highest since Nov. 23. Prices are up 76 percent this year.
Oil tumbled 2.5 percent on Nov. 27 after Dubai World, a government investment company burdened by $59 billion of liabilities, sought to delay repayments. The company has begun what it described as “constructive” talks with banks to restructure $26 billion.
“The further away we get from the initial shock about Dubai World, the less of a shadow it seems to cast on all of the markets,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut.
Dollar Falls
The dollar fell against the euro after Dubai said its debt talks are “constructive,” adding to demand for higher-yielding assets. The U.S. currency traded at $1.5087 against the European currency, down from $1.5005 yesterday.
“The weaker dollar is adding to the upward pressure on oil,” Beutel said. “The seizure of the tanker by Somali pirates and of the Iranian yacht, which boosted prices yesterday, continue to make oil futures attractive.”
The U.K. called for release of five British sailors detained by Iran. The crew members were taken into custody on Nov. 25 after their vessel may have “inadvertently” entered Iranian waters, Foreign Secretary David Miliband said.
The Greek-owned supertanker Maran Centaurus was taken by pirates off Somalia on Nov. 29 while heading to the U.S. from Jeddah in Saudi Arabia.
Iranian Oil Minister Masoud Mir-Kazemi said the Organization of Petroleum Exporting Countries won’t increase production targets when it meets later this month, Agence France-Presse reported.
Angola Meeting
The 12 OPEC states will assemble in Luanda, Angola, on Dec. 22 to review their output targets and the impact of supply reductions announced last year, the largest in the group’s history. Ministers from Kuwait and Nigeria have also indicated they expect quotas to be left unchanged.
OPEC increased production by 110,000 barrels a day to the highest level in 11 months, according to the survey of oil companies, producers and analysts. Iraq, the only OPEC member without an output quota, was the sole member to cut production. Countries with quotas pumped 26.5 million barrels a day, 1.655 million above their target.
Brent crude oil for January settlement on the London-based ICE Futures Europe exchange rose 93 cents, or 1.2 percent, to $79.40 a barrel.
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net
