WTI Crude gains as China’s manufacturing growth beats estimates

Brent crude was little changed after falling for four of the past five days. OPEC is poised to keep its oil-production target unchanged at its meeting this week, according to a Bloomberg News survey.

Futures earlier rose as much as 0.7 percent in London after China’s Purchasing Managers’ Index registered 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday, a result that exceeded 24 out of 26 projections in a Bloomberg survey. OPEC will decide on Dec. 4 whether to keep its output limit at 30 million barrels a day. Brent’s premium to West Texas Intermediate narrowed for a third day after widening to the most in almost nine months.

“Despite some fairly positive manufacturing PMI data, oil prices look set to remain under pressure, particularly Brent, which seem rather expensive when compared to its U.S. peer,” Michael Hewson, a London-based market analyst at London-based CMC Markets Plc, said. “We could well see further losses toward $105 in the coming sessions.”

Brent for January settlement advanced as much as 78 cents to $110.47 and was at $109.54 a barrel as of 1:40 p.m London time on the ICE Futures Europe exchange. The volume of all futures traded was about 3 percent above the 100-day average. The European benchmark was at a premium of $16.42 to WTI. The spread closed at $19.01 on Nov. 27, the widest since March 7.

WTI for January delivery was at $93.14 a barrel on the New York Mercantile Exchange. Prices fell 3.8 percent in November, a third monthly decline.

Chinese Manufacturing

The official Chinese manufacturing index yesterday matched the 18-month high in October. A separate gauge today from HSBC Holdings Plc and Markit Economics was 50.8, exceeding all 13 analyst estimates. A reading above 50 signals expansion.

“What we’ve seen over the past few months is a clear steadying of the growth outlook in China,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “The idea of a hard landing, which was damping energy demand, has now all but dissipated.”

China will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., according to the International Energy Agency, a Paris-based adviser to developed nations.

The U.S. will release manufacturing data for November at 10 a.m. in Washington. The report may show that output in the world’s largest oil consumer grew for a sixth month.

OPEC Supply

Brent rose 0.8 percent in November for a second consecutive monthly advance as unrest in Libya, holder of Africa’s largest oil reserves, disrupted supply. Output slid 40,000 barrels a day last month, a Bloomberg survey showed.

Crude production from the Organization of Petroleum Exporting Countries dropped to a two-year low in November, led by losses in Saudi Arabia and Nigeria, according to the survey of oil companies, producers and analysts. Output from the 12-member group decreased by 245,000 barrels a day to an average of 30.01 million last month compared with 30.25 million in October.

OPEC is expected to reaffirm a collective limit of 30 million barrels a day at its meeting in Vienna, according to 22 of 24 analysts and traders surveyed by Bloomberg News.

“The market expects the quota ceiling to be left unchanged, and there will be little reaction to the price if it does,” Bjornar Tonhaugen, senior commodities analyst at Oslo-based Nordea Bank AG, said by phone. “The more interesting thing will be what OPEC does rather than what it says, as it is finally adhering to its own level — but due to production outages rather than cutting back.”

WTI may fall this week as U.S. production at the highest level in almost 25 years boosts inventories, according to another Bloomberg survey. Ten of 23 analysts and traders, or 43 percent, forecast futures will decline through Dec. 6. Six respondents projected an increase and seven predicted no change.

U.S. crude output climbed to 8.02 million barrels a day in the seven days ended Nov. 22, the fastest rate since January 1989, data from the Energy Information Administration showed last week.

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