Oil rises for a second day as China manufacturing grows

Oil advanced in tandem with equities, and as a weaker dollar enhanced the appeal of commodities for hedging inflation. The purchasing managers' index for China, released Tuesday by HSBC Holdings Plc, rose to a seasonally adjusted 55.7 from 55.4. The government's PMI, also released Tuesday, held at an 18-month high, aiding the rebound of the world's third-largest economy.

“Chinese oil demand should increase by 5 percent this year, 4 percent next year,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna.

Oil for January delivery gained as much as US$1.16, or 1.5 percent, to US$78.44 a barrel in electronic trading on the New York Mercantile Exchange. That's the highest in a week. The contract traded at US$78.15 a barrel at 11:23 a.m. London time.

Brent crude oil for January settlement on the London-based ICE Futures Europe exchange traded at US$79.26 a barrel, up 79 cents, at 11:12 a.m. in London. Yesterday, the contract rose 1.7 percent to US$78.47 barrel, the highest since Nov. 18.

Oil traded near US$78 a barrel on Nov. 25 before Dubai World, one of the emirate's three largest state-linked holding companies, sought to delay payments on its debt and other liabilities. The company has since begun what it described as “constructive” talks with banks to restructure US$26 billion, less than half of its US$59 billion in obligations.

“Dubai is being resolved and China is as busy as ever,” said Rob Montefusco, a broker at Sucden Financial in London.

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.

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 output rose to the highest level in 11 months in November, averaging 28.9 million barrels a day, a Bloomberg News survey showed. Countries with quotas pumped 26.5 million barrels a day, 1.655 million above their target.

U.S. crude-oil inventories probably fell as refineries increased operating rates and imports declined, a Bloomberg News survey of analysts showed.

Stockpiles of crude oil dropped 850,000 barrels in the week ended Nov. 27 from 337.8 million the prior week, according to the median of eight estimates by analysts before an Energy Department report this week. Five respondents forecast a decrease, and three said there would be an increase.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email