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Oil Advances From One-Week Low On China Manufacturing Data

By on July 24, 2012

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 0.7 percent after slipping 4 percent yesterday. A preliminary reading for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics was 49.5. If confirmed, that would be the highest since February. In June, the final number 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.

Oil for September delivery gained as much as 64 cents to $88.78 a barrel in electronic trading on the New York Mercantile Exchange, and was at $88.76 at 2:43 p.m. Sydney time. The contract yesterday decreased $3.69 to $88.14. Prices are down 10 percent this year.

Brent crude for September settlement advanced 83 cents to $104.09 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 $15.36, from $15.12 yesterday.

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.

Oil Supplies

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.