Crude Oil Climbs After Reports Show Gains in U.S., Chinese Manufacturing

Crude oil rose after manufacturing in the U.S. and China, the world’s biggest energy consuming countries, accelerated at a faster pace than expected in August. Oil climbed as much as 3 percent and equities rebounded from the biggest August slump in nine years after the Tempe, Arizona based Institute for Supply Management’s factory index rose to 56.3 from 55.5 in July. U.S. crude oil supplies increased 3.43 million barrels to 361.7 million last week, an Energy Department report showed today.

“Oil moves along with equities, the fundamentals don’t matter,” said Chip Hodge, who oversees a $9 billion natural, resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Any shred of positive or negative economic news will move the oil market by a couple percentage points.” Crude oil for October delivery rose $2.26, or 3.1 percent, to $74.18 a barrel at 10:59 a.m. on the New York Mercantile Exchange. Oil traded at $73.63 a barrel before the release of the report at 10:30 a.m. in Washington.

Economists forecast the ISM factory index would decline to 52.8, according to the median of 78 projections in a Bloomberg News survey. Estimates ranged from 49.9 to 56. Manufacturing in China grew at a faster pace in August after the weakest performance since early 2009 in July, signaling that the economy’s slowdown is stabilizing.

Rising Index
The purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, a government-backed report showed. Seasonal factors might have had an effect because the index typically gains as factories restart following July maintenance, Mizuho Securities Asia Ltd. said. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4.

The August reading for the government index was more than the median 51.5 forecast in the Bloomberg survey of 17 economists. Fifty is the dividing line between expansion and contraction.
Australia’s economy grew at the fastest pace in three years last quarter, stoked by China’s demand for iron ore. Gross domestic product advanced 1.2 percent from the first quarter, when it rose a revised 0.7 percent, the Bureau of Statistics said in Sydney today.

Reporter Mark Shenk can be reached at mshenk1@bloomberg.net and Margot Habiby at mhabiby@bloomberg.net.

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Oil Rises to Seven Week High as Refinery Operating Rates Gain

Oil rose to a seven week high after a U.S. government report showed that refinery operating rates climbed to the highest level since October, bolstering demand. Refinery utilization increased 0.7 percentage point to 81.9 percent in the week ended Feb. 26, the Energy Department said. Analysts surveyed by Bloomberg News forecast that there would be no change. Inventories of crude oil climbed 4.03 million barrels, more than three times what was estimated.

“Refinery run rates increased strongly, which should whittle down the huge oversupply of crude oil,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “This market just wants to go higher, even when there is bearish news.” Crude oil for April delivery increased $1.31, or 1.6 percent, to $80.99 a barrel at 11:40 a.m. on the New York Mercantile Exchange. Futures reached $81.23, the highest level since Jan. 12. Oil traded at $80 a barrel before the release of the inventory report at 10:30 a.m. in Washington.

Total U.S. fuel demand, averaged over the past four weeks, was 19.3 million barrels, up 3 percent from a year earlier, the department said. “We’re seeing a little demand improvement, which gives impetus to higher prices,” said Chip Hodge, who oversees a $9 billion natural resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “There continues to be optimism that economic growth will accelerate, and with it demand.”

Nationwide stockpiles of crude oil rose 1.2 percent to 341.6 million, the highest level since August, the report showed. It was the biggest gain since the week ended July 24.....Read the entire article.


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Oil Falls the Most in a Month as U.S. Consumer Spending Drops

Crude oil fell the most in a month after U.S. consumer spending dropped for the first time since April, increasing skepticism that the economy will strengthen. Oil decreased as much as 3.8 percent and equities declined after the Commerce Department said purchases slipped 0.5 percent in September in the world’s biggest energy consuming country. Futures climbed the most in two weeks yesterday after a government report that the U.S. grew in the third quarter.

“People are still antsy that this will be a tepid recovery,” said Chip Hodge, who oversees a $9 billion natural- resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. “Given where the economy is, $80 oil doesn’t make a hell of a lot of sense.” Crude oil for December delivery fell $2.83, or 3.5 percent, to $77.04 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Prices are down 4.3 percent this week, the first decline this month. Futures are set to gain 9.1 percent in October, the biggest monthly increase since a 30 percent rally in May.....Read the entire article.